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Emergency Manager Kevyn Orr

Emergency Manager Kevyn Orr

Week 51 of the Occupation

By Shea Howell
Special to the Michigan Citizen

Detroit Emergency Manager Kevyn Orr and his high-priced attorneys fail to provide adequate representation for the city. They continue to fall short of basic responsibilities in protecting city interests.

It seems Orr and company are determined to give tax money to bankers, no matter how questionable the banker’s claims. The initial efforts to settle debts with Bank of America, Merrill Lynch and USB were rejected by Judge Rhodes as “too costly.” This time Jones Day is offering a settlement of $85 million to the banks on the so-called swaps deal. Many critics of Orr think the deal was originally illegal and the city should sue the banks, not pay them.

As in the first two offers from Orr, Judge Rhodes will have to decide if he thinks this is a fair settlement. Since he has already gone on record saying that he thinks the city should sue these banks, it is hard to see why he would agree to this offer. It is $200 million less than the first offer, but it is a high price tag for what was most likely an illegal loan.

Additionally, this offer was put forward in haste. It seems Orr’s high priced lawyers hadn’t secured the signatures necessary to indicate a commitment from the banks. Nor did the attorneys bother to mention this questionable state of affairs to the judge. They just wanted his blanket approval of a deal with terms not yet settled.

News accounts described bankruptcy judge Steven Rhodes as “irked” by the lack of basic protocol.

When Judge Rhodes asked why he was being asked to approve of a deal that had not been finalized, Detroit bankruptcy lawyer Robert Hertzberg replied, “We believe we had an agreement. A term sheet is an agreement.”

“It’s not a term sheet you’ve asked me to approve, it’s an agreement not yet done,” the judge said.

Hertzberg then offered the excuse, “I’ve done this many times.” This prompted Judge Rhodes to point out, “That doesn’t make it right.”

“I assure the court the settlement agreement will read the same as the motion we filed,” the lawyer said.

“Why wasn’t it already done?” Rhodes asked.

“It’s been a struggle,” the lawyer said, “a lengthy negotiation.”

“It’s been a struggle, how can I accept your assurance that it will be done on any date?” the judge asked.

This kind of shoddy logic and slippery process are typical of what the city is seeing from Kevyn Orr and his representatives.

They appear oblivious to the critical role banks have played in creating the financial crisis, to the needs of the city, and to their responsibilities to its people.

This foolish failure to get a signature was accompanied by an effort to get pensioners to approve of drastic cuts to their income.

In an almost laughable attempt to reach pensioners, Orr announced retirees would be mailed a CD-ROM containing the city’s debt-cutting plan, a ballot and a return envelope. Pensioners are expected to wade through over 400 pages of documentation and to tease out details scattered throughout to understand what will affect them.

It is hard to imagine how this will be at all meaningful to most people whose lives will be altered drastically should the proposed reductions in pensions, cost of living increases and benefits be approved.

An attorney for the retirees, Carole Neville, objected to the whole idea. She explained to the judge, “They need a simplified version of the plan and the treatment of retirees. I can’t imagine sending out CDs to a population that has thousands of people over 85.”

Rhodes agreed, saying, “I am very concerned about that. There are two things they want to know: How much they will be paid and when?”

Rhodes warned Orr and company the voting process must be clear and explain what impact cuts will have on people. “I won’t tolerate any confusion.”

Confusion, questionable allegiance, lack of attention to detail, and a disregard for the public right to know have consistently punctuated the reign of EM Orr.

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