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Bankruptcy: Detroit warns the nation



By Zenobia Jeffries
The Michigan Citizen

DETROIT — “Detroit deserves better than this,” Michigan Congressman John Conyers (D) told over 300 people at a recent forum.

Conyers, the ranking Democrat on the House Judiciary Committee, convened the Sept. 7 forum to discuss the implications of Detroit’s bankruptcy filing. He says there’s been too little public discussion on the issue and “no accountability for the momentous decisions being made” under emergency management. The forum, held at Fellowship Chapel, was aired nationally on C-SPAN.

Professor Michael Eric Dyson moderated and set the stage for a fiery few hours.

Dyson, a Detroit native, says democracy is being denied to hundreds of thousands of people in this city.

“This is not only about Detroit,” Dyson said. “This is about what’s happening across the country.

This is what happens when you’ve got predatory forces coming in to take over the real estate infrastructure of a city at the behest of a right-wing ideology that has no understanding of, or appreciation for these duly elected officials or the citizens that populate this city.”

The 13 panelists continued in this vein, making strong statements regarding the bankruptcy and the emergency manager law that paved the way for its filing.

Rev. Wendell Anthony, pastor of Fellowship Chapel and president of the Detroit Chapter NAACP, called both premature.

“We are unequivocally and unapologetically opposed to the emergency manger,” Rev. Anthony said, explaining that over 50 percent of the African American population in Michigan is disenfranchised and under emergency management. “It’s unconstitutional, undemocratic and goes against the grain of what America is supposed to be about. We believe that the imposition of an emergency manager and the subsequent bankruptcy filing is premature.”

Anthony added that the point system, to determine which local units of government would receive emergency managers, is flawed.

“There are cities in Oakland County that are qualified but emergency mangers were not appointed,” Anthony said. Oakland County is among the wealthiest in the country.

His comments were followed by Councilwoman Jo Ann Watson who resounded, “the City of Detroit did not file bankruptcy.”

“The federal bankruptcy law says plainly that elected officials file for municipal bankruptcy.

The governor gets to approve the filing, if it happens; it does not say the governor gets to file it, then approve it.”

Watson also mentioned emails, which were published by this paper, that revealed Detroit’s Emergency Manager Kevyn Orr, the governor’s office, as well as mayoral candidate Mike Duggan had a plan for an EM-led bankruptcy filing.

“In June 2011, Gov. Snyder said he will not let Detroit declare bankruptcy,” Dyson said. “‘Detroit is not going to declare bankruptcy,’ he told bond rating agencies in New York. ‘We’re going to work hard so that doesn’t happen.’”

No one from the governor’s office or the EM’s office was on the panel.

Most on the panel pointed at the state for “manufacturing” a crisis in the city.

Albert Garrett, president of American Federation of State, County and Municipal Employees Council 25 (AFSCME Council 25) said unions offered solutions for resolving the city’s reported $18 billion deficit before the appointment of an EM.

“(Mayor Dave) Bing failed to ratify the contract because the governor told him not to,” Garrett said. “There has been a decision by those in charge that folks in the city of Detroit don’t matter.”

According to Garrett, the state is responsible for creating a crisis and gave his reasons. “One: The state cut revenue sharing. You take a significant amount of my money and then tell me my books don’t match? Two: The state reneged on a deal to pay back revenue sharing. (State Treasurer Andy) Dillon agreed the state owes the city $800 million of uncollected tax revenue. Three: The same time the city is filing bankruptcy, we’re spending $360 million on a toy called a hockey arena.”

Garrett blasted Orr and the governor for attempting to cheat city workers and pensioners.

“City workers, by the sweat of their brow and intellect, earned their pension.”

Nobody gave them anything, Garrett said.

University of Michigan Ann Arbor law professor John Pottow said he believes “it’s unconscionable to not pay people the pensions they have earned.”

Pottow, who said the bankruptcy will likely prevail on the issue of eligibility, also he doesn’t believe there’s been an accurate reading of the bankruptcy law.

“There is a lot of talk that Chapter 9 requires all creditors to be treated equally. I don’t think that’s an accurate statement of the bankruptcy law,” he said. “The law says you cannot discriminate unfairly against creditors. If you think pension holders are differently situated from bondholders based on financial circumstances, I can understand the argument where it would not be unfair discrimination to treat that group differently in a Chapter 9 bankruptcy.”

Pottow also says media is discussing the bankruptcy as if it is a business or a corporate entity.

“If that’s going to be the narrative used, if I were negotiating for retirees, I would turn it and use it as in Chapter 11. In Chapter 11, you get to share in the upside when there are good times.

So rather than take a straight cut, ask, ‘what do I get in the future?’ People get stock options in the upside.”

Economist Julianne Malveaux called what’s happening in Detroit and majority Black cities across the country a “simple wealth transfer.”

“You have seen a loss of Black wealth all over the country,” Malveaux said. “But if you follow the money you’ll see Detroit is not bankrupt. The reported $18 billion is a fraction of what the Big Three owed. Why is it that the city that houses them is not too big to fail? The Big Three should be pressured to fight for Detroit.”

According to Malveaux, one of the city’s biggest problems is the lack of urban policy from the state or federal government.

During public comments, Atty. Herb Sanders, who led the lawsuit to get the repeal question for Public Act 4 on the ballot last November, demanded a “call to action” for citizens.

Congressman Conyers said his first order of business when he returned to Washington was to put forth legislation to provide a backstop so that the pensions of city workers will not be affected and for public safety funds to protect Detroit citizens.

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