Detroit Continues Struggle Against Bank Takeover

Abayomi Azikiwe, editor of the Pan-African News Wire, sitting at the Labor Monument in Hart Plaza in downtown Detroit on September 27, 2008. (Photo: Alan Pollock)., a photo by Pan-African News Wire File Photos on Flickr.

Detroit Continues Struggle Against Bank Takeover

Workers, retirees, community groups fight back to preserve jobs, pensions and assets

By Abayomi Azikiwe
Editor, Pan-African News Wire

Hundreds of members of the American Federation of State, County and Municipal Employees (AFSCME) gathered in Hart Plaza on the banks of the Detroit River last Friday July 12. 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.

AFSCME was holding a national youth gathering called The New Wave Conference at Renaissance Center where workers from other parts of the United States joined in with their brothers and sisters from Detroit to say no to more lay-offs and cutbacks. After a speak out at Hart Plaza, the workers and their supporters marched across the street to the Coleman A. Young Municipal Center (CAYMAC), City Hall, where they entered the building and occupied the main entrances for a short period of 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 the 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.

Lawsuits were filed earlier in the week by retirees and pension fund boards in an effort to halt the city from being placed in federal bankruptcy court. Emergency manager Kevyn Orr, a former partner at the multi-billion dollar Jones Day law firm that supervised the Chrysler bankruptcy in 2009, is demanding concessions from the workers and retirees which threaten monthly pension payments and healthcare benefits for previous employees.

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

Members of the Moratorium NOW! Coalition to Stop Foreclosures, Evictions and Utility Shut-offs joined in with the AFSCME workers in this demonstration. The community organization which is now calling for the cancellation of all of Detroit’s municipal debt to the banks, distributed 300 leaflets that demands the protection “for all current and future City retirees.”

This same leaflet with a bold headline which reads “Cancel Detroit’s Debt to the Banks” says that a struggle needs to be waged to improve city services, protect city assets such as Belle Isle, the Detroit Institute Arts and the Detroit Water and Sewage Department. The organization is demanding that the City “restores lost wages and benefits for workers and to stop union busting and privatization.”

Banks Reject Notion of Taking Losses in “Debt Payments”

On June 14 at a meeting with bankers, bondholders and their insurers at Wayne County Airport outside Detroit, Kevyn Orr told the financial interests that they may have to accept less than what they claim is owed to them by the working people of the city. Orr declared a moratorium on both interests and principal payments on what is characterized as “unsecured” debt.

A debt payment of $39.7 million was withheld in order to utilize the funds for the operation of the city. Yet Orr reiterated his demand that workers, retirees and residents would also have to suffer more losses in order to address the crisis where the banks are claiming long term liabilities of up to $20 billion from the City of Detroit.

In the Moratorium NOW! Coalition leaflet it says that “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 the modest plans of Orr. One firm, Syncora Guarantee Inc., has challenged Orr on his efforts to place Casino tax revenue directly into the general operating funds for the City.

Casino tax revenue, which during the late 1990s was being touted as the salvation to the decline of Detroit, no longer goes directly into the general fund but is controlled by Syncora in order to pay off the banks. U.S. Bank handles the tax funds from the casinos and Syncora is threatening 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 to the standoff between the bond insurer and the emergency manager after Syncora countersued Orr claiming that 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 utilized casino tax revenue to pay its clients rather than turning over these funds to the City. In doing this Orr contends that Syncora is undermining his efforts to restructure the debt.

The Detroit News also noted in this same article that “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 are reflective of a number of statements made by spokespersons for the financial institutions in recent weeks. Orr offered to take representatives of the banks and bond insurers on a “city blight tour” to illustrate the grave crisis in existence for Detroit, but the corporate representatives refused to attend.

This tour for the bankers is reminiscent of the “Corporate Devastation Tours” organized by Moratorium NOW! Coalition at the “People’s Summit and Tent City” held in June 2009 where hundreds occupied Grand Circus Park for four days as a protest against the National Business Summit that was being 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 in Detroit 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 that “Only a united, mass movement of the people of Detroit can insure 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 bailout of the banks in 2008. The effort is designed to attract people from around the state and the country to focus attention on the need for a major fight back against the attacks on the cities.

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