Detroit: Largest Bankruptcy Trial in U.S. History Ends

Abayomi Azikiwe, editor of the Pan-African News Wire, on the Estulin program aired on RT television Spanish language service. Azikiwe discussed US militarism in Africa., a photo by Pan-African News Wire File Photos on Flickr.

Detroit: Largest Bankruptcy Trial in U.S. History Ends

The struggle continues for jobs, pensions, healthcare, city services and equal treatment

By Abayomi Azikiwe
Editor, Pan-African News Wire

Federal Judge Stephen Rhodes heard closing arguments in the largest municipal bankruptcy trial in United States history on November 8. The City of Detroit being unjustly represented by the law firm of the imposed emergency manager Kevyn Orr, Jones Day, attempted to make a case for forcing the majority African American municipality into insolvency where pensioners may get as little as sixteen cents on the dollar.

During the course of the preliminary hearings in federal court, over 23,000 retirees received letters from Orr’s office saying that their healthcare plans would be terminated by the end of this year. Subsequent announcements indicate that the deadline has been extended to the end of February 2014.

The judge will issue a ruling on whether the city is insolvent and whether the state-imposed emergency manager conducted “good faith” negotiations with the unions and other creditors prior to filing for bankruptcy. Attorneys for the unions say that the actions of Orr and his team has been shrouded in secrecy and that a decision was already made prior to any efforts to discuss these issues with the labor leaders and pensioners.

According to Sharon Levine, the attorney representing the American Federation of State, County and Municipal Employees (AFSCME) in the bankruptcy trial, “You don’t know how or what is going to be cut. How could you make a counterproposal without the very basic, simple facts?” (NYT, November 8)

Additional hearings will be held on the emergency management plans to pay off a swap deal with Bank of America and United Bank of Switzerland (UBS) which, if given the go ahead, will drive the city further into financial ruin. The Detroit City Council, where a majority of members have voted consistently with the banks, unanimously rejected the swap deal on October 21 that would be refinanced by Barclays, later sending a resolution to the bankruptcy court explaining why the arrangement was no good for Detroit workers, retirees and taxpayers.

Other efforts by the Detroit City Council to renew calls for intervention in the bankruptcy proceeding by the Security and Exchange Commission (SEC) are also underway. Earlier during the summer several members of the Stop the Theft of Our Pensions Committee (STOP-C) wrote a letter to the SEC pointing out the citations, lawsuits and ongoing criminal investigations leveled against numerous financial institutions that are involved in the destruction of Detroit.

These entities were major holders of fraudulent mortgage notes and municipal loans which have driven the city into unsustainable debt. At present Orr’s office is claiming that Detroit owes up to $22 billion divided into what they describe as both secured and unsecured creditors.

The objective of the Barclays swap deal was to pay off the banks prior to a decision on the eligibility of the Chapter 9 bankruptcy filing. Yet no offer has been made or accepted in relationship to the obligations owed to pensioners and employees.

This plan to pay off the banks first would be guaranteed through casino and income tax revenues. Any city asset worth more than $10 million dollars would also be put up as collateral for the deal, a proposal which has offended even more moderate elements on the Detroit City Council.

The Struggle Continues

On November 12 a demonstration in front of the Bank of America headquarters in the financial district downtown once again placed blamed on the banks for the current city crisis. A united front representing the Moratorium NOW! Coalition, Detroiters Resisting Emergency Management (DREM) and the National Action Network (NAN) called for the protest.

The aim of the demonstration was to demand that the bankruptcy court reject the swap deal with Barclays, the threatened cuts to pensions and healthcare programs and for the maintenance of city jobs and public assets. These organizations have held demonstrations for months against the imposition of emergency management and the illegal bankruptcy filing carried out by Governor Rick Snyder who appointed Orr, both of whom are working diligently on behalf of the banks and corporations.

Whether the bankruptcy is allowed to go forward or not, the attacks on workers, retirees and city residents will continue. Efforts are well underway to further privatize city services and assets.

A Public Lighting Authority has already been established at the state level to take control of the much neglected system from city control. Due to the disinvestment by the federal and state governments from the city, no real infrastructural improvements have been conducted in decades.

The public transportation system is in shambles. The Detroit Public Schools Board of Education has been taken over by the State of Michigan with the appointment of three emergency managers since 2009.

Firefighting stations and personnel have been cut to the bare minimum while emergency medical technicians are so short of staff that it sometimes takes up to forty-five minutes to respond to calls. Street crime has skyrocketed and the focus on this aspect of the city crisis by the corporate media is prompting calls for greater security measures.

Firefighters have held several demonstrations against proposed cuts to their pensions and benefits. At demonstrations outside the federal courthouse, firefighters, city workers (both active and retired) have marched alongside community activists and leftists chanting “Hands Off Our Pensions, Make the Banks Pay!”

Another Sham Mayoral Election

Meanwhile city elections were held on November 5 where a corporate agent Mike Duggan was installed with less than 25 percent of the electorate participating. Duggan is the first white man elected as mayor since 1969 when Roman Gribbs won by 7,000 votes.

When Gribbs was elected in 1969, Detroit had a population of 1.4 million. Today it stands at half that number with 700,000. Gribbs’ administration faced virtual collapse with massive police misconduct resulting in a crisis in 1972-73 that could have prompted another rebellion even more violent than the one in 1967.

Since 1973, when former labor organizer and leftist Coleman A. Young took control and held power for two decades, no white man has held this position. Nonetheless, since the retirement of Young in 1993, all of the subsequent mayors have been more than willing to accept the full corporate program for the city without question. Young died of natural causes four years after his retirement in 1997.

Even Dave Bing, a former CEO of an auto-related firm, who took office in 2009, was promoted by the corporate media as a successful businessman that could make and implement “difficult decisions.” Since Bing took office 4,000 city employment positions have been eliminated and the overall conditions for residents are worsening.

Duggan, who was a political functionary of the previous Ed McNamara Democratic Party county machine, later became the Wayne County Prosecutor. When the County administration fell on hard times, Duggan was offered the CEO position over the Detroit Medical Center.

When Duggan took over at the DMC it was listed as a non-profit organization. He privatized the system and sold it off to a firm operating out of Tennessee.

Duggan was denied ballot status during the spring but ran as a write-in candidate. He received only 74,000 votes but due to the abysmal turnout won the election by 14,000 votes against his opponent Benny Napoleon, the Wayne County Sheriff who was the former police chief for the City of Detroit under the administration of Dennis Archer when police misconduct and brutality resulted in a federal investigation and two eventual consent decrees that the City still remains under at present.

Duggan’s campaign and ballot status has been subjected to allegations and legal challenges claiming massive fraud. It is obvious that Duggan is working closely with the corporate elites in Detroit to continue the process of indebtedness and the denial of fundamental democratic rights.

The offices of the EM and Duggan, who is slated to take office in January, are providing no real solutions to the Detroit crisis. There is no mention of the need to cancel the bank debt, to provide jobs and city services to the people of Detroit.

Consequently, the people of Detroit have no choice accept to continue the movement against the banks and corporations which have driven the City into the present crisis. The outcome of the bankruptcy trial and the overall struggle for jobs, city services, pensions and healthcare will portend much for the future of other municipalities around the U.S.

There are at least 18 other states that have been designated as having pension systems that are underfunded. The Obama administration has also floated plans for the reduction in Social Security and Medicaid/Medicare benefits as well.

Unless the working class and nationally oppressed communities organize independently of the two major capitalist parties under a program for jobs, economic equality, self-determination and self-rule the conditions of the overwhelming majority of people throughout the U.S. will worsen. Capitalism and its functionaries have no program to address the crisis other more austerity and repression domestically coupled with imperialist war abroad.