Demonstration in front of Bank of America in downtown Detroit demanding a moratorium on debt service payments by the city government. Detroit taxpayers turn over $597 million annually to the banks. (Photo: Abayomi Azikiwe), a photo by Pan-African News Wire File Photos on Flickr.
A $28 Million Bonus:Bank of America to Profit More If Legal Challenges to Dictatorship Continues
PANW Editor's Note: The real agenda behind the so-called "Financial Stability Agreement" was revealed by the corporate media when it was stated that if Corporation Counsel Krystal Crittendon did not drop a legal challenge to the FSA that $28 million in revenue-sharing funds slated for the imporverished city would go directly to Bank of America for debt service payments.
Detroit is in debt to the same corporate vultures who have destroyed the city for decades with capital flight and predatory lending through the housing industry as well as fradulent bond sales and usurious interest rates on loans. The real reason behind the imposition of a synthetic "Financial Advisory Board" and "Project Manager" is to ensure that the banks get paid the $16 billion they claim is owed to them by the people of Detroit.
In fact the people of Detroit owe the banks nothing. The banks and corporations owe the city for decades of exploitation and racist practices.
At present Detroit is facing the lay off of thousands of public sector employees and further cut backs in municipal services. This is why the only short-term solution is a moratorium on the payment of debt service to the banks and the eventual cancellation of all municpal debt involving the City of Detroit.
Every effort to challenge the dictator Public Act 4 law has been stalled and obstructed by the courts and the political system. The corporate media acts as cheerleaders for the banks by denouncing every effort to win back the hundreds of millions owed to the city by the State of Michigan and refusing to even address the role of the banks in strangling and destroying the city.
Editor, Pan-African News Wire
Detroit could lose $28M payment if Detroit lawyer doesn't stop consent deal challenge
June 29, 2012
Attorney Krystal Crittendon says the deal with the state violates the city charter.
By Dawson Bell, Matt Helms and Suzette Hackney
Detroit Free Press Staff Writers
A $28-million state revenue sharing payment to the City of Detroit will be withheld today unless the city's top lawyer, Krystal Crittendon, drops her challenge to the legality of the financial stability agreement between the city and state, a state treasury department spokesman said Thursday.
Terry Stanton said Crittendon is refusing to renounce the challenge to the agreement, which she claims violates the city charter.
Her position, Stanton said, makes it "next to impossible" for the city to issue bonds needed to repay short-term borrowing from earlier this year.
Without an agreement from Crittendon not to continue her legal challenge, the bank administering the earlier loan will be required to stop Detroit's monthly revenue sharing payment to repay the loan, Stanton said.
It is not clear how long the city could survive without the payment.
Reached late Thursday, Crittendon disputed the state's assertion that she has refused to sign bond documents. "I have told them I will sign all relevant, accurate, truthful and necessary documents," she said.
But she declined to discuss renouncing the consent agreement -- a position that would force her to undercut her own legal arguments and her interpretation that the consent agreement violates the city charter.
Crittendon also declined to discuss a possible appeal after a lawsuit she filed -- which contended that the consent deal violates the city charter -- was dismissed by an Ingham County Circuit judge earlier this month. She has until July 5 to decide whether to continue the legal battle.
Crittendon filed the suit at the request of City Councilwoman JoAnn Watson and with the early support of Mayor Dave Bing and most of the City Council. Bing later changed his mind, saying he wanted Crittendon to drop the suit.
Crittendon said the deal violated the charter by entering Detroit into contracts with a state government in default to it for $224 million in disputed revenue sharing and other unpaid debts. The state said it does not owe Detroit the money.
After unsuccessfully seeking enough votes on the council to have Crittendon removed from her position as the city's chief lawyer and demoted to a civil service position, Bing said he would no longer rely on the city's law department for legal advice and instead bring in outside lawyers.
Council President Charles Pugh and several of his colleagues have indicated they would prefer the matter be dropped now that a judge has made a decision on Crittendon's challenge of the consent deal.
Bing said in a statement Thursday evening: "This is exactly the negative financial outcome and potential harm to the city that we've been working to avoid, and why I went before the City Council attempting to get their support to remove the corporation counsel."
Earlier Thursday, in response to inquiries from the Free Press, Stanton issued a statement in which he said: "Ms. Crittendon has indicated she will not sign the required bond transaction documents. Further, she has not provided assurances that she won't continue to challenge the legality of the agreement or file additional legal actions.
"Without those assurances, we do not believe we can move forward with the bond deal at this time, and the city's revenue sharing payments would begin to be intercepted in order to begin paying off the bonds that were issued this spring."
State officials had said Crittendon's suit raised doubts about whether Detroit can be required to pay off bonds it used to avoid running out of cash, so the state would use $80 million in revenue sharing to pay that bond debt unless Crittendon relented. Credit-rating agencies later cited her suit when they downgraded Detroit's bond ratings, making it more expensive for Detroit to borrow money.
On April 4, the City of Detroit entered a consent agreement with the state that helped the city avoid the appointment of an emergency manager to oversee its bleak financial condition. The city was in deficit of more than $200 million and had long term debt obligations of about $12 billion.
The city plans to lay off hundreds of employees in the next few months.
Contact Dawson Bell: 517-372-8661 or email@example.com
Crittendon silent on whether she will drop legal challenge; $28 million in jeopardy
12:39 PM, June 29, 2012
Detroit Free Press
Krystal Crittendon, Detroit’s lead city attorney, won’t say publicly whether she plans to drop her legal challenge to the city’s financial stability agreement with the state.
But one of her top aides gave an indication that Crittendon doesn’t consider the matter over and she’s keeping her options open as the July 5 deadline for an appeal approaches.
Crittendon’s deputy corporation counsel, Edward Keenan, called Attorney General Bill Schuette’s office Thursday morning asking if the state would join Crittendon in asking a Lansing-area judge to reconsider his decision that tossed out Crittendon’s lawsuit earlier this month, according to a letter Schuette’s staff sent in reply.
Schuette’s response: No way.
The letter from Frank Monticello, a division chief in Schuette’s office, said the attorney general believes Crittendon’s claims are meritless.
“We are also concerned over the impact your request to prolong this needless litigation will have on the ability of the city of Detroit to meet its financial obligations,” Monticello wrote in a letter obtained today by the Free Press. “The uncertainty created by your litigation … will make any bond transaction untenable and lead to the further escalation of the city’s financial problems.”
The state says it will withhold $28 million in revenue sharing to Detroit today unless Crittendon backs down and pledges not to pursue any appeal. It wasn't clear this morning how quickly that withheld payment would impact the city's abilities to pay bills and meet payroll, but city officials previously warned that losing the revenue sharing money would have catastrophic consequences on the city's finances within only a matter of days.
But Naomi Patton, Detroit Mayor Dave Bing’s press secretary, said this afternoon that the city never expected to receive the $28 million revenue sharing payment until July 9, and city finances are on track — for now.
“There are no payroll issues at this point,” she said. “We are not at the point of no return.”
Still, Patton said the consent agreement challenges are having a negative effect on the city’s ability to pay back a $137 million bond that was approved in March to help the cash-strapped city stay afloat. In the three months since the sale of the bond was approved, the interest rate has jumped from 2.8% to 6.25%, costing the city an additional $10,000 per day, she said.
Crittendon filed suit challenging the consent agreement – which avoided appointment of an emergency manager in exchange for state oversight of Detroit’s finances – as a violation of the city charter. She says the state owes Detroit $224 million in revenue sharing and the city charter prohibits Detroit from contracting with entities in debt to the city.
Schuette’s office disputes that argument. Ingham County Circuit Judge William Collette threw out Crittendon’s lawsuit, saying she did not have the legal standing to sue without approval of Mayor Dave Bing and the City Council.
Collette did not rule directly on Crittendon’s arguments about violations of state law and the city charter, but Monticello’s letter makes it clear Schuette does not side with her.
“We urge you to accept our assurance that neither the Home Rule City Act nor the Detroit City Charter is applicable here and end this litigation now by providing a written assurance that you will not appeal Judge Collette’s decision,” Monticello wrote.
Crittendon could not be reached immediately for comment today.
Contact Matt Helms: firstname.lastname@example.org, @matthelms or 313-222-1450