Forced Bankruptcy and Privatization of the City of Detroit: Law Suit in Federal Court
Contradicting what the corporate media editorial boards have promoted in chorus with the multi-millionaire Governor Rick Snyder and his appointed emergency manager Kevyn Orr, 110 people filed objections to the forced bankruptcy of the City of Detroit. The hearing took place on September 19 and was widely covered in the local, national and international press.
This extraordinary hearing had provided only a small window of time for legal action. Many of the people that testified were retirees, city workers, community organizers and professionals who met the deadline set by the Judge Steven Rhodes to submit their objections.
Outside the federal courthouse on Lafayette Blvd. downtown, members of the Moratorium NOW! Coalition carried a banner which read “Cancel the Debt: Jobs, Pensions, City Services, the Banks Owe Us!” Later a group of active firefighters gathered to demonstrate their displeasure with the state of affairs facing the people of this majority African American municipality.
Retired Detroit Department of Health chemist Walter Knall, a member of the Stop the Theft of Our Pensions Committee (STOPC), told the Free Press in front of the courthouse that what the banks and their operatives are attempting in the city could set a pattern for the rest of the United States. “I don’t see how anyone could take (pensions) away from a whole generation of people who’ve worked hard for the city,” Knall said.
Testimony Illustrates Broad Opposition to Bankers’ Rule
Jean Vortkamp, a lifelong Detroiter and recent mayoral candidate for the 2013 primary elections, broke out in tears as she expressed her opposition to what she considered an illegal bankruptcy filing by Orr and Snyder. She said “If this bankruptcy and the goal of pension cutting are allowed, it will impoverish my parents, sister, friends and neighbors. Many seniors say that cutting health care and their meager incomes is a way to cut the senior population.”
Vortkamp continued stressing “If the undemocratic EM whom I did not elect is going to break union contracts and pensions, then he should also break the contracts Detroit has with financial institutions. Our assets are not for sale. It is not either the art or the pensions. It is neither.”
Pointing the finger at the banks and their role in the financial ruin of Detroit, she asked “Why haven’t we sued for the LIBOR rigging? Collected unpaid taxes from the wealthy and fines from blight and environmental violations? Detroit needs to protect our assets and get the forensic audits we have needed for decades – of all depts., authorities and the work the State and Jones Day has done here.”
Vortkamp surmised before Judge Rhodes that “I suspect there is a small group of racist rich men and banks who have been pulling the puppet strings of Detroit for a very long time. As I stand in bankruptcy court I would say they haven’t done a good job. Detroiters need to stop blaming themselves and stop listening to the local media that is controlled by these rich men and banks.”
Later Michael Shane, a resident of the northwest side of Detroit, told the bankruptcy court of the impact of predatory lending carried out by the banks had contributed to the economic crisis of the city. He described the practices of the banks as illegal and racist in its overall character.
“The financial crisis in Detroit was triggered by the housing crisis where an estimated 100,000 home foreclosures occurred and almost a quarter million people left the city. The banks issued predatory loans, targeting Detroit and other communities of color in a racist and illegal manner,” Shane noted.
Shane then emphasized that “The banks have already been fined tens of billions of dollars. And former bank employees are testifying under oath, confirming the illegal and racist practices of the banks. Some of this testimony includes racially offensive language that cannot be repeated in polite company. These banks include many of the same banks who hold Detroit’s debt.”
“Property and income taxes dropped precipitously during this crisis, causing huge losses to the City of Detroit. And to make matters even worse, the banks refuse to pay property taxes on homes seized after foreclosure,” Shane told Judge Rhodes.
Another objector to the bankruptcy filing was Cynthia Blair, the widow of a Detroit police officer. Blair has been active in attempts to mobilize retirees and their families against the program of cuts and austerity being imposed by Orr and Snyder.
Blair said “The bankruptcy could take me and my daughter’s pension away. And we would be thrown directly to the welfare rolls.”
According to the figures released by the emergency manager, Detroit has over $22 billion in long term debt. These purported debts are to the banks, bondholders and insurers who have played the most significant role in the decline of the city.
Orr is attempting to cut a deal with the banks and bond insurers where they will be paid 80 percent of what they say is owed to them by Detroit while pensioners and workers are being chained with massive obligations that derive directly from financial practices dictated by Wall Street and the corporations, many of whom are based in the metropolitan area.
The automobile firms of General Motors and Chrysler were bailed out in 2009 by the federal government. Nonetheless, the pre-packaged bankruptcy and restructuring resulted in the loss of tens of thousands of jobs and small businesses such as car dealerships which employed skilled and often unionized workers.
People in Detroit are saying that the municipality is not a private corporations and that people have a vested interests in maintaining their jobs, salaries, healthcare benefits, pensions and city assets. Many more people are agreeing with the slogans and program advanced by the Moratorium NOW! Coalition calling for the cancellation of the bank debt and the holding of the financial institutions and corporations accountable for the damage they have done to the city.
Survey Reveals Mass Opposition to the Theft of Pensions and Assets
Further confirming the widespread anger over the attempts by Orr and Snyder on behalf of the banks to impose unbearable austerity on the city, a study conducted by the Detroit Free Press and WXYZ Channel 7 revealed that 75 percent of likely voters said they were against any cuts to municipal pensions. In addition, 78 percent also responded that they also opposed the selling off of the works at the Detroit Institute Arts (DIA) to pay the bankers. (freep.com, September 22)
Nonetheless, this opposition must be organized if it is to be effective. In fact the entire emergency management process had been rejected by a majority of people around the state of Michigan in a referendum held just last November.
However, Snyder and his cohorts in the state legislature in December 2012 passed another law that re-instituted this pseudo-legal rationale for municipal dictatorship and austerity. Even the bankruptcy filing procedure was conducted illegally says Krystal Crittendon, the former Corporation Counsel of the City of Detroit Law Department.
Crittendon, who was later removed from her position as head of the law department for opposing emergency management, but still works within it, noted that an actual bankruptcy must be filed by elected officials of a municipality. Consequently, the agents of banks in Lansing working through Kevyn Orr violated even the state constitution in carrying out this attempt to further drive the city and its people into deeper poverty and oppression.
The International People Assembly Against Banks & Austerity is being organized by the Moratorium NOW! Coalition and other community organizations in Detroit and surrounding areas. Over 280 endorsements for the gathering on October 5 and 6 at Grand Circus Park downtown have come in so far.
The event will coincide with the fifth anniversary of the massive bank bailout in 2008. This bailout is continuing through the compensation by the Fannie Mae and Freddie Mac for so-called toxic assets as well as the $85 billion turned over by the Federal Reserve to the banks every month.
This two-day long event will feature people from the city, the nation and indeed the world. Statements of solidarity have been issued from people’s organizations in Brazil, Portugal and other states facing similar crises.
The International Peoples Assembly will also be designed to build for a massive mobilization on October 23 when Judge Rhodes hears arguments on the constitutionality of the bankruptcy filing. Members of the coalition putting together the Assembly say that people should surround the courthouse on October 23 calling for the end of the bankruptcy and the cancellation of bank debt.
Organizers for the International Peoples’ Assembly are encouraging all of those concerned to join the effort in solidarity with the city of Detroit.
- Forced Bankruptcy and Privatization of the City of Detroit: Law Suit in Federal Court (jhaines6.wordpress.com)
- Detroiters resist banks and bankruptcy ahead of Oct. 5-6 People’s Assembly (workers.org)
- Detroit Residents File Objections to Illegal Bankruptcy in Federal Court, Opposing Pension Theft and Privatization (libya360.wordpress.com)
- Detroit’s bankruptcy was a last resort, state attorney argues at eligibility trial – @freep (freep.com)
- Detroit Averted ‘Payless Payday,’ Analyst Tells Court (bloomberg.com)
- Governor’s aide in the hot seat (wxyz.com)
- Detroit voters elect Duggan mayor of broke city (cnsnews.com)