Jul 202013
Demonstrators march in the "Great Walk to Freedom, 50th Anniversary, June 22, 2013

Demonstrators march in the “Great Walk to Freedom, 50th Anniversary, June 22, 2013

By Abayomi Azikiwe, Workers World newspaper, July 18, 2013

Hundreds of members of the American Federation of State, County and Municipal Employees gathered on July 12 in Hart Plaza on the banks of the Detroit River. A series of speakers decried the relentless attacks being waged on city workers in Detroit and across the country under the guise of addressing the economic crisis.

That was in conjunction with ­AFSCME’s national youth gathering called “The New Wave Conference” at Renaissance Center where workers from other parts of the United States joined with their brothers and sisters from Detroit to say “No” to more layoffs and cutbacks. After a speakout at Hart Plaza, the workers and their supporters marched across the street to City Hall, the Coleman A. Young Municipal Center, where they entered the building and occupied the main entrances for a short time.

The conference, which attracted people from 40 states, was held in Detroit because the attacks on the city workers in Motown are representative of the overall pattern nationwide. Municipal employees are being blamed by corporate-oriented politicians and media for the monumental debt crisis that was directly caused by the predatory policies of the largest banks and financial institutions.

“Labor is under attack from [Michigan] Gov. Snyder,” said AFSCME organizer Charles Lester during the protest. “This is for the working people so they know people are standing in solidarity with them.” (MLive.com, July 13)

Detroit retirees and pension fund boards filed lawsuits earlier in the week in an effort to keep the city out of federal bankruptcy court. Emergency Manager Kevyn Orr, a former partner at the multibillion-dollar Jones Day law firm that supervised the Chrysler bankruptcy in 2009, is demanding concessions from the workers and retirees that threaten monthly pension payments and healthcare benefits for previous employees.

Members of the Moratorium NOW! Coalition to Stop Foreclosures, Evictions and Utility Shut-offs joined the ­AFSCME workers in this demonstration. The community organization, which is now calling for cancellation of all of Detroit’s municipal debt to the banks, distributed leaflets that demand protection “for all current and future City retirees.”

The leaflet’s bold headline read, “Cancel Detroit’s Debt to the Banks,” and the text states that the people must wage a struggle to improve city services, protect city assets such as Belle Isle, the Detroit Institute Arts, and the Detroit Water and Sewage Department. The organization demands that the city “restores lost wages and benefits for workers and to stop union busting and privatization.”

Banks, insurers reject ‘debt payments’ losses

At a June 14 meeting at Wayne County Airport outside Detroit, Orr told bankers, bondholders and their insurers that they may have to accept less than what they claim Detroit’s working class owes them. Orr declared a moratorium on both interest and principal payments on what is characterized as “unsecured” debt.

The city withheld a debt payment of $39.7 million in order to keep the city operating. Yet Orr reiterated his demand that workers, retirees and residents would have to suffer more losses to resolve the crisis while the banks claim long-term liabilities of up to $20 billion from the city of Detroit.

The Moratorium NOW! Coalition leaflet reads, “Detroit Emergency Manager Kevyn Orr agrees that Detroit’s massive debts to the banks are unpayable and is the root of Detroit’s ‘financial’ crisis. These banks destroyed our neighborhoods with their racist, predatory lending practices. The banks caused 100,000 Detroit home foreclosures.”

The leaflet acknowledges that actions at the June 14 meeting “showed bank payments can be stopped. But make no mistake, Orr is a hired hit-man for the banks … and that the imposed emergency manager law, Public Act 436, says it is his job to guarantee payment of the bank’s debt service at the expense of city jobs, services and pensions.”

Nonetheless, the banks, bondholders and insurers are striking back against even Orr’s modest plans. One firm, Syncora Guarantee Inc., has challenged Orr on his efforts to place casino tax revenue directly into the city’s general operating funds.

Casino tax revenue, which during the late 1990s was being touted as the salvation to reverse Detroit’s decline, no longer goes directly into the general fund. It is instead controlled by Syncora in order to pay off the banks. U.S. Bank handles the tax funds from the casinos, and Syncora has threatened them with legal action if they turn this revenue over to the city.

Orr took Syncora to federal court and won a temporary restraining order. A purported agreement was reached on July 12 in a standoff between the bond insurer and the emergency manager after Syncora countersued Orr, claiming he was not negotiating in good faith.

According to the Detroit News, “Syncora is involved in a ‘swap agreement,’ secured by casino revenue, in which the company collects casino money as a trustee, makes the payments on the swaps, and, per the agreement, is supposed to send the remaining funds to the city. In a second deal, Syncora insures some separate certificates of participation — known as COPs — which were issued in another deal to help support the city’s struggling public pensions.” (July 15)

Orr claimed that Syncora used casino tax revenue to pay its clients rather than turning over these funds to the city. Orr contends that by doing this, Syncora is undermining his efforts to restructure the debt.

The Detroit News article also noted, “As an insurer, Syncora will have to absorb its clients’ losses, which could reach 90 cents on the dollar in the COPs issue, under terms proposed by Orr, while investors in the swaps would get all their money.”

These actions by Syncora reflect other statements made in recent weeks by spokespeople for the financial institutions. Orr offered to take representatives of the banks and bond insurers on a “city blight tour” to illustrate Detroit’s grave crisis, but corporate representatives refused to attend.

This tour organized for the bankers is reminiscent of the “Corporate Devastation Tours” organized by the Moratorium NOW! Coalition at the “People’s Summit and Tent City” held in June 2009. Then hundreds occupied Grand Circus Park for four days to protest the National Business Summit held at Renaissance Center during the same period. The “Corporate Devastation Tour” was also conducted for members of the world press during the 2010 Auto Show and more recently for Michigan State University African Studies scholars during a conference in April.

Nonetheless, the bankers do not want to see the impact of their policies on Detroit. They are only concerned about exploiting the city even further.

Two municipal retirees who are members of Moratorium NOW! Coalition, Cheryl LaBash and David Sole, are currently working to organize pensioners for actions outside the legal framework where the struggle can raise demands that go directly to the heart of the crisis.

Moratorium NOW! Coalition said in a recent statement: “Only a united, mass movement of the people of Detroit can ensure that funding for human needs comes before payments to the criminal banks.”

Moratorium NOW! Coalition is planning a major gathering in October to coincide with the fifth anniversary of the 2008 bailout of the banks. The effort is designed to attract people from around the state and the country to focus attention on the need for a major fightback against the attacks on the cities.

Sound cars went out into the communities on July 13 where leaflets and a petition were distributed demanding that Orr investigate the banks for criminal actions. Plans are underway for this outreach to continue on a weekly basis throughout the summer.

2 Responses to Detroit: People battle bank takeover

  • Cheryl says:

    On 7/18 the governor-appointed Emergency Manager filed for federal bankruptcy for Detroit, the largest municipal bankruptcy in U.S. The capitalist system, its banks and corporate profiteers, are making it clear that it will not allow a modicum of bourgeois democracy for the Black community — an oppressed nation within the U.S. The front page of the 7/19 New York Times announces the bankruptcy filing on the upper right but on the lower left says: “Big banks, flooded in profits, fear flurry of new safeguards.” The facts are clear the banks and auto industry OWE the working class in Detroit. It owes everyone (not just current retires) security in retirement, free quality education, decent affordable health care and a quality place to live and jobs at real living wages and a future for the generations to come. The banks owe us! http://detroitdebtmoratorium.org/

  • Cheryl says:

    Even the judge said the EM’s bankruptcy move was aimed at stealing Detroit city workers’ pensions — a debt secured by our years of hard work. But it is aimed at workers everywhere — especially young folks just starting out. Hands off our pensions! Secure futures for all poor and working people! ————————-

    Ingham County judge: Detroit bankruptcy filing was unconstitutional, must be withdrawn
    Written by Paul Egan Detroit Free Press
    Jul. 19, 2013 3:22 PM | lansingstatejournal.com

    LANSING —An Ingham County judge says Thursday’s historic Detroit bankruptcy filing violates the Michigan Constitution and state law and must be withdrawn.

    But Attorney General Bill Schuette said he will appeal rulings issued today by Circuit Judge Rosemarie Aquilina’s and seek emergency consideration by the Michigan Court of Appeals. He wants her orders stayed pending the appeals, he said in a news release.

    In a spate of orders today arising from three separate lawsuits, Aquilina said Gov. Rick Snyder and Detroit emergency manager Kevyn Orr must take no further actions that threaten to diminish the pension benefits of City of Detroit retirees.

    “I have some very serious concerns because there was this rush to bankruptcy court that didn’t have to occur and shouldn’t have occurred,” Aquilina said.

    “Plaintiffs shouldn’t have been blindsided,” and “this process shouldn’t have been ignored.”

    Lawyers representing pensioners and two city pension funds got an emergency hearing with Aquilina Thursday at which she said she planned to issue an order to block the bankruptcy filing. But lawyers and the judge learned Orr filed the Detroit bankruptcy petition in Detroit five minutes before the hearing began.

    Aquilina said the Michigan Constitution prohibits actions that will lessen the pension benefits of public employees, including those in the City of Detroit. Snyder and Orr violated the constitution by going ahead with the bankruptcy filing, because they know reductions in those benefits will result, Aquilina said.

    “We can’t speculate what the bankruptcy court might order,” said assistant Attorney General Brian Devlin, representing the governor and other state defendants.

    “It’s a certainty, sir,” Aquilina replied. “That’s why you filed for bankruptcy.”

    Devlin said Snyder has to follow both the Michigan Constitution and the U.S. Constitution.

    Schuette’s office issued a statement saying an appeal has been filed on behalf of the governor in all three cases before Aquilina.

    “In addition, the Attorney General filed motions to stay the trial court rulings and any future proceedings while the appeals proceed,” spokeswoman Joy Yearout said. “Later today, we expect to file additional motions seeking emergency consideration.”

    Aquilina issued a declaratory judgment that says the bankruptcy filing violated the Michigan Constitution.

    “In order to rectify his unauthorized and unconstitutional actions … the Governor must (1) direct the Emergency Manager to immediately withdraw the Chapter 9 petition filed on July 18, and (2) not authorize any further Chapter 9 filing which threatens to diminish or impair accrued pension benefits,” she said in her order.

    John Canzano, a Southfield attorney representing retirees, cautioned there are no contempt implications for Snyder if he doesn’t follow the judge’s instructions. But he said he will likely return to court seeking further relief if Snyder doesn’t instruct Orr to withdraw the bankruptcy filing.

    Asked what the judge could then do, Canzano said: “I will have to do my homework.”

    Douglas Bernstein, a partner with Plunkett Cooney in Birmingham, said Aquilina’s ruling is surprising.

    “This is generally how bankruptcies occur: You file bankruptcy when there is an impending crisis at the eleventh hour,” Bernstein said. “You file bankruptcies to stave off litigation.”

    University of Michigan law professor John Pottow said the issue could travel up the court system, all the way to the Michigan Supreme Court. Or it could be answered decisively and quickly in bankruptcy court, he said.

    “There’s nothing that precludes a federal judge from adjudicating the constitutionality of the Michigan statute,” Pottow said. “The bankruptcy judge can interpret Michigan law.”

    Aquilina, who like most of the judges on the Ingham court has a Democratic background, appeared prepared for the likelihood her orders will be appealed by the state.

    “Let’s get this moving to the Court of Appeals, because that’s where you all are headed,” she said.

    She also ordered that a copy of her declaratory judgment be sent to President Barack Obama, saying he “bailed out Detroit” and may want to look into the pension issue.

 July 20, 2013  Posted by at 8:28 pm Uncategorized Tagged with: , , ,

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