Bankruptcy

Detroit was not “saved” by bankruptcy. In a right wing takeover, it was looted by banks and billionaires who stripped Detroiters of their rights. This film exposes the truth about the Detroit bankruptcy and the people involved. Detroit citizens and pensioners were abandoned by the justice system and local & state government and left to fight on their own. Hear from the
citizens and pensioners of Detroit how billions were stolen from them.

Film length – 57 minutes

RESOURCES ABOUT THE DETROIT BANKRUPTCY

(Some links no longer work, but it may be possible to find the articles under subscriptions etc so we have provided our links just unclickable)

BANKRUPTCY: PENSIONS

• “Looting the Pension Funds” from Rolling Stone
• “Rhode Island Public Pension Reform: Wall Street’s License to Steal” 
• Manhattan Institute’s Public Sector Inc.  – this website for Public Sector Inc. disappeared but the main website is still there. Hmmm…
• There are currently about 20,000 retirees and 10,000 people working. There are two pension funds, the General Retirement System and the Police and Fire Retirement System. Police and Fire do not get social security when they retire.
• Here is an article about how a guy explaining about ALL the municipal pensions manipulates the numbers to make them look much worse. (Update: of course they fudged it. See this article in the Detroit Free Press : Analysis shows Detroit pension funds in better shape than Orr says
• The Emergency Manager can be made the sole trustee of the pension fund. See the wording in Section 12(m) of the EM Law.
• ORR, MILLIMAN ATTACK ON DETROIT PENSIONS: ‘A VERY ROUGH PRELIMINARY GUESSTIMATE’
• Detroit Takes Aim at its Pensioners  A good article about the whole situation.  (This is the old url: http://blogs.reuters.com/felix-salmon/2013/06/17/detroit-takes-aim-at-its-pensioners/)
• At the end of this article http://www.freep.com/article/20130620/NEWS01/306200072/Orr-unions-health-care-cuts (link no longer works but you can look it up in their archive) it speaks to how Orr can transfer the Detroit pension fund to the Michigan Public Employees Retirement Fund. Look at HOW underfunded that is. http://www.freep.com/article/20130519/NEWS05/305190055/detroit-public-pensions-wayne-michigan-stocks
• Pension fund accounting “error”. The City in 2012 FORGOT (?) to budget in 28 million dollars incurring an almost 2 million dollar late fee.  (Old url http://www.michronicleonline.com/index.php/2011-08-04-18-06-26/rss-feeds/189-breaking-news/8909-detroit-pension-fund)
• In Embattled Detroit, No Talk of Sharing Pain June 2013
• Pension Funds Wary as Bankrupt City Goes to Trial About Stockton
• Bankrupt Stockton California pensioners vs. bondholders.
• Central Falls, Rhode Island  pensioners ‘ treatment in bankruptcy. A must read about pensions and municipal bankruptcy. Another article about how bankruptcy steals from workers. Then how the city gave raises (or money to try to cover the losses they took) to the workers after the bankruptcy. Another article about  their post-bankruptcy. (Old url https://www.wpri.com/dpp/news/local_news/retirees-hit-amid-cf-bankruptcy-endgame)
• BANKRUPTCY AND THE LIBOR SCANDAL
• An article in the LA Times explains all about the alleged interest rate rigging that may have gotten Detroit into a lot of financial trouble and how the FDIC sued them. http://www.latimes.com/business/la-fiw-fdic-sues-banks-over-libor-20140314,0,6595071.story#axzz2wQKtvLtE
• This article, “Only Wall Street Wins” explains it in simple terms and how Detroit owed a 474 million dollar fee on bonds.
• Long term cost of bonds and the fees involved: “Interest Rate Swap Leaving Detroit Holding the Bag, EM Law for Banks to be Paid in Full.” 
• The $1.5 billion pension deal with Universal Bank of Switzerland (UBS) 
• The article “Everything Is Rigged: The Biggest Price-Fixing Scandal Ever” is a very accessible article about interest rate swaps and the current financial market challenges.
• According to an article from Bloomberg Businessweek in 2009, Detroit pays 4.2 million a month (all of our casino money) to pay Universal Bank of Switzerland for a debt that may be questionable at best. http://www.businessweek.com/stories/2009-11-17/wall-street-plays-hardball
• Chapter 9 Bankruptcy from the official US Courts website. “The purpose of chapter 9 is to provide a financially-distressed municipality protection from its creditors while it develops and negotiates a plan for adjusting its debts. Reorganization of the debts of a municipality is typically accomplished either by extending debt maturities, reducing the amount of principal or interest, or refinancing the debt by obtaining a new loan.” Interesting to note that Chapter 9 is sort of feds hands-off  – see why: ” The restrictions imposed by 11 U.S.C. § 904 are necessary to ensure the constitutionality of chapter 9 and to avoid the possibility that the court might substitute its control over the political or governmental affairs or property of the debtor for that of the state and the elected officials of the municipality.”
• Municipal Bankruptcy: An Overview  http://www.statebudgetsolutions.org/publications/detail/municipal-bankruptcy-an-overview-for-local-officials
• What Happens When a City Declares Bankruptcy?  
• Here is bankrupt Stockton’s webpage for citizens about their process. http://www.stocktongov.com/government/departments/manager/bankruptcy/default.html
• Here is Stockton’s “confidential neutral evaluation process used by the City to try and avoid bankruptcy, known as AB 506”. http://www.stocktongov.com/government/departments/manager/bankruptcy/default.html
• Detroit Driving Toward Its Own Debt Cliff  old but interesting.
• A County in Alabama Strikes a Bankruptcy Deal Chase Bank gave up $842 million in the deal.
• BANKRUPTCY: DETROIT FINANCIAL BASICS
  • See the 2013-2014 Proposed Capital Agenda This has a lot of information about the city’s bond debt.
  • See the City’s annual reports and audits

BANKRUPTCY: BONDS/BANKS

• What are municipal bonds? Investors invest in a piece of a city’s debt and are promised interest in return. For simple but more detailed information visit the government’s investor web page about bonds. Another good beginner article is here.
• What is an interest rate swap and how have they hurt Detroit? This article explains it in simple terms and how Detroit owed a 474 million dollar fee on bonds.
• Interest Rate Swap Leaving Detroit Holding the Bag, EM Law for Banks to be Paid in Full.
• Universal Bank of Switzerland (UBS) pension bond – the 1.5 billion dollar monster pension bond – YIKES.
• How Libor (interest rate) rigging affected Detroit.  Ethics and honesty are the things that protect future generations from unnecessary debt burden. This shows how adults have not been doing their jobs, neither in Detroit nor in the world.  More about how it affected many cities.  Here’s an interesting article asking why the EM isn’t looking into the money lost from the Libor rigging. http://www.mfi-miami.com/2013/05/why-isnt-the-detroit-efm-talking-about-reclaiming-the-5b-caused-by-ubs-libor-manipulation/
• What does Goldman Sachs have to do with Detroit? They “helped” Detroit sell their bonds in 2010.  See the article below as well.
• How Wall Street doesn’t lose on bad swaps. According to this article Chase got 7.8 million in fees from Detroit. (2012) Read this one. The article explains how the city purchased auction-rate securities at a premium and is “paying a higher interest rate on the debt it sold to raise the money for the purchases. Trading in the bonds shows that the borrowing through a deal lead-managed by Goldman Sachs & Co. (GS) cost the city more than was necessary, because the price was too low.” http://www.businessweek.com/news/2012-09-13/detroit-shows-wall-street-never-loses-on-bad-swaps-muni-credit#p1
• State of Pay About Detroit’s municipal bonds, bond insurers, and the federal govt’s involvement in bonds – bond holders are looking to see if bonds will start defaulting everywhere. June 2013
• Swaps may be paid first over pensions. Jones Day (where the EM comes from) represents Bank of America. They backed up SBS on the swaps.
• Here is Moratorium Now’s analysis of Orr’s May report. They dispute many of his numbers.
• Bankruptcy and bonds.  May 2013 More about bankruptcy and bonds. May 2013
• Sell Alert comparing the looks of Detroit to Beirut and advising bond sellers that they may have to “take a hit”.
• Detroit Issues Proposal for Creditors. An article differentiating what Orr classifies as secured and unsecured debt and how unconventional his plan is. For instance, classifying general obligation funds which have a full faith and credit pledge as unsecured.
• Who insures Detroit’s bonds? Here is one group. It explains why municipal bonds are good investments.
• Can you default on on your municipal bonds? What effect does it have? One opinion.
• This article gives an amusing description of the situation in Detroit between banks and the people here. Read the paragraph about local sovereignty and how they put democratic “rights” in quotation marks.
• Everything Is Rigged: The Biggest Price-Fixing Scandal Ever A very accessible article about interest rate swaps and the current financial market challenges.
• Free Press article Insurers, not mutual funds, would take the hit if Detroit debt goes bad 
• Toledo Blade On brink of bankruptcy, Detroit suspends some debt payments
• An article from the Mackinac Policy Center explaining why they don’t want bankruptcy for Detroit. A must read.
• Alabama County Fights JPM-Chase & Gets Over 50% Taken Off Bond Debt
• This is an interesting article of how they will start selling small bonds in California and Massachusetts. Let’s see how that works out for them. If its good, there are some possibilities for Detroiters to invest in themselves.
  BANKRUPTCY: STATE REVENUE SHARING 

• $732 million dollars was diverted from Detroit’s revenue sharing according to the Michigan Municipal League.
• What is revenue sharing? “State revenue sharing is the process by which a portion of certain tax revenues imposed and collected by the State of Michigan are distributed to local units of government, including municipalities, as provided by State law. Currently, the State shares a portion of sales tax revenue with local governments.” (EXHIBIT 3 CITY OF DETROIT MAJOR REVENUES FOR FISCAL YEAR 2007-2008 THROUGH FISCAL YEAR 2012-2013)

BANKRUPTCY: DETROIT TAX SYSTEM

• Detroit’s citizens are taxed more highly than in any other city of 50,000 or more in the state.

• Detroit taxes people who work here but do not live here, but often does not collect those taxes.

•  Here is an article about how big corporations may owe taxes. Surprise that when they were interviewed they said no. LOL. Of course.

• The city took a $68 million loss in revenue sharing from 2010-2011 to 2011-2012.

• The city’s revenue sharing is now being taken for payments on the Michigan Finance Authority for the 8/21/2012 $129,520,000 Local Government Loan Program Revenue Bonds, Series 2012C. According to Reuters, transferring the money made the bonds investment grade. This bond is from Bank of America that is – surprise – a bank that Jones Day represents.

• The $220 million dollar revenue sharing question. Here is some information about that issue.
• City’s annual reports and audits 2013-2014 Proposed Capital Agenda. This has a lot of information about the city’s bond debt.City’s annual reports and audits. This  article explains all about the interest rate rigging that got Detroit into financial trouble. The banks that did it are being sued by the FDIC. Would you like to see just HOW in debt we are? Go to the municipal bond market website and type in Detroit, MI. Click on each current bond and see how much each one is for. That is all debt for Detroiters. Hold onto your seat.To see which municipal bond funds hold Detroit bonds, visit this webpage.

• Why should there be revenue sharing? Here is an interesting perspective from the Roosevelt Institute.