Present drastic cutbacks plan to State Treasurer, big media
Refuse to confront corporations who owe city $870 M, banks other cities are suing for fraudulent lending practices
By Diane Bukowski
DETROIT – Six of Detroit’s nine City Council members are openly collaborating as an independent body with state officials, big business media, and Wall Street in a war against the city’s 82 percent Black population, where 51 percent of public school children live in poverty.
The six, Council Pres. Charles Pugh, Pres. Pro-Tem Gary Brown, and members Saunteel Jenkins, James Tate, Kenneth Cockrel Jr., and Andre Spivey, met openly with the editorial boards of the city’s two dailies, The Detroit News and the Detroit Free Press Dec. 27. According to the newspapers, they presented a plan for drastic cuts in workers’ wages and benefits, 1,000 lay-offs in addition to last year’s 2,500, and the sale of some city assets, in order to address an alleged budget deficit.
They said they had already sent the plan to State of Michigan Treasurer Andy Dillon, without discussion or approval by the Council as a whole, or disclosure to the people, a likely violation of the State’s Open Meetings Act. They said they hope it will stave off the appointment of a state “emergency manager” under the “Local Financial Stability and Choice Act” signed by Michigan Governor Rick Snyder Dec. 27 to replace Public Act 4, which was overwhelmingly repealed by state voters Nov. 6.
“This reminds me of slavery days,” Chris Griffiths told the Council at its session Dec. 11, where the majority voted for contracts and land sales opposed by hundreds of residents at various meetings. “You guys are doing the exact same thing the white people did to us.”
An emergency manager (EM) has absolute control over a municipality or school district. The EM can dissolve or regionalize it, sell off its assets, revoke union contracts, and remove elected officials or override their decisions.
City Councilwoman JoAnn Watson, a leader in the battle to repeal PA4, said, “This meeting came as a shock to me. I found out from Council member Kwame Kenyatta who said a staff member at the Free Press told him. I have not received a copy of the plan, and am meeting with legal representatives right now about possible Open Meetings Act violations.”
Watson has sponsored a resolution calling on the city to collect over $800 million in taxes and other charges owed to it by major corporations. (Click on Money Owed the City12-11-12 final for full resolution as revised.) A recent expose in the Detroit News showed that the Detroit Red Wings, the city’s hockey team owned by local billionaire Mike Illitch, owes $70 million in cable franchise fees to the City.
Attorney Jerome Goldberg of the Moratorium NOW Coalition called on the city to make the banks pay what they owe for criminal predatory lending practices not only to homeowners, which have devastated Detroit’s neighborhoods, but to the city itself.
“Rather than taking the blood out of the workers with an additional 20 percent wage cut and requiring them to pay a large part of their pension and health costs, when they have been taking cuts for years, the Council should look at who the real robbers are, and sue them as other cities are doing,” Goldberg said.
“Dillon is fully aware of the real basis for the city’s deficit,” Goldberg explained. “He and the city’s first financial review team concluded that without interest payments to the banks, the city would have more than enough revenue to fund its expenses. Their report showed the city owes a total debt of over $16.9 billion, with $4.9 billion in interest. The banks’ fraudulent lending procedures, including a $1.5 billion pension obligation certificates (POC) loan in 2004, forced the city to pay an additional $1 billion to hedge funds for betting wrong on which way interest rates would go.” (Click on Detroit FRT report 3 26 12 for full report.)
According to Reuters, UBS, the Swiss global bank which pressed the $1.5 billion POC loan on Detroit, just paid a $1.5 billion fine, most of it to the U.S. Department of Justice. It admitted to committing criminal fraud in manipulating interest rates from 2005 through 2010. The City of Baltimore and dozens of other borrowers are suing UBS and 12 other banks involved in the so-called “LIBOR” (London Interbank Offered Rate) scandal for their losses.
“It is an outrage that Detroit’s City Council and Mayor have not joined this fight against the banks,” Goldberg said. “They need to end up in the dustbin of history after the people rise up. We are about to file a Freedom of Information Act (FOIA) request asking for copies of all city bond documents so we can conduct a people’s review. The state instead is rushing to put an EM in place to ensure payment of this fraudulent debt.”
The six City Council members had not returned calls and emails for comment for this story before press time, but were quoted in stories in the News and Free Press. The Free Press story included photos showing them laughing and smiling.
“My perception is . . . . our plan, if implemented, could work,” Pugh told the News. “There’s got to be some pretty tough cuts of an estimated $15 million a month for at least the next three months.”
He told the paper he had been in touch with state officials, adding, “This time there has to be a plan and the plan (has) to be implemented. The state realized you do have some people in place who are willing to make tough decisions . . . .The real prospect of an emergency financial manager has never been more real and (with) the few options we have left, the mayor realizes this is do or die.”
Over this Council’s term since 2009, its majority has repeatedly recommended deeper cuts to the workers and poor than even those proposed by Detroit Mayor Dave Bing.
Pugh in particular has scoffed at the public during hearings on the city’s April 4 PA4 consent agreement, a contract with the Miller-Canfield law firm, which helped draft PA4 and acted in the interests of the state against the city in other matters, and the largest land sale in the city’s history, 143.8 acres for $520,000 to Hantz Woodlands, LLC to establish a “tree farm.”
At a public hearing swamped by over 600 residents opposed to the land sale Dec. 10, the Council was told that Hantz’ parent company, Hantz Financial, is embroiled in litigation over a $2.2 billion Ponzi scheme the company recommended to investors, and that it paid a $675,000 settlement in 2005 for admitted fraud. However, they voted for the sale anyway.
During the Dec. 11 hearing, Pugh ridiculed former school board member Marie Thornton as she spoke during public comment, then ordered Council police to remove her. She staged a civil rights-style protest, lying down as audience members shouted to the police to get their hands off her, until Pugh finally relented.
“The Council members would get all dressed up and meet with the media during the holidays,” Thornton, who garnered 90,000 votes in the school board election, said. “But they are powerless now; they are already dead because of the consent agreement. If they think that they are going to get more power from meeting behind closed doors with Snyder and his kind, they are wrong. No one is going to vote for those Negroes in the 2013 election.”
Pugh has deliberately held key Council hearings in the small Council chambers, rather than the large auditorium down the hall where the Council previously sponsored meetings with large turn-outs. As a result, hundreds, including seniors and the disabled, have been forced to stand outside in the hallway waiting their turn to render one minute each in public comment, unable to see or hear the Council proceedings, another violation of the Open Meetings Act.
“The Council majority is not working for us,” said Cecily McClellan of Free Detroit-No Consent, and also a laid-off city worker and union official. “They are working for the Chamber of Commerce and corporate America.”
Jay Henderson, president of the Riverbend Community Association, called for new people’s strategies to regain control of Detroit in the New Year.
“We need to go back to the tactics of the ‘60’s,” he said. “The definition of insanity is to keep doing the same thing over and over again but expect different results.”
Below is video from May 9, 2011 demonstration against the banks in downtown Detroit.
Also see tbe world-wide battle against the banks and corporations portrayed in “Meltdown–The Global Economic Crisis.” (Video below)