DETROITERS DEMAND FAB STEP DOWN IN WAKE OF PA4 REPEAL: “MAKE BANKS BLEED”

•  Residents challenge control by banks, state
• Detroit not broke according to FAB docs; duty to bargain reinstated
• Mayor Dave Bing colludes with State Treasurer Dillon to withhold bond funds

November 14, 2012 

By Diane Bukowski

DETROIT– Despite the definitive defeat of Michigan’s Public Act 4 (PA4) at the polls Nov. 6, its minions handling City of Detroit governmental affairs appear determined to stay until they are dragged out by their heels.

Detroit’s “Project Management Director” Kriss Andrews (I), told VOD he and the Financial Advisory Board are not leaving. Here he presents report to FAB Nov. 12, 2012.

Members of the community and city workers appear equally determined to see them vanish into the dustbin of history. At meetings of the city’s “Financial Advisory Board” (FAB) Nov. 12 and of the Detroit City Council Nov. 13, they demanded “people before banks,” and excoriated state-appointed officials and their elected collaborators. They said that “social tension” in Detroit is rapidly rising.

Financial Advisory Board meeting Nov. 12

Linda Willis demands cancellation of Detroit’s debt to the banks during protest at Bank of America held May 9, 2012.

“We are proceeding forward with the reform agenda,” Walter ‘Kriss’ Andrews told VOD at the beginning of the Nov. 12 meeting of the FAB, established by the city’s PA4 Financial Stability [consent] Agreement (FSA). “We are not planning to stop at all. The repeal of Public Act 4 didn’t put one dime in the city’s coffers.”

The nine-member FAB is an appointed board which can overrule the city’s elected officials.  Andrews is the “Project Management Director” for Detroit, appointed to his $220,000 -a year position by Michigan Governor Rick Snyder and Detroit Mayor Dave Bing to enact a “reform agenda” by dismantling the city.

Andrews presented a 77-page report to the FAB. He claimed it shows the city is in imminent danger of going broke. However, the report does not include in city revenues the remaining $81 million the city borrowed from the state under the consent agreement, or pending property tax payments. Instead, it adds a costly “re-structuring analyst,” likely a firm. Detroit would be liable for half the costs of that firm.

Marie Thornton, with granddaughter Tylynn behind her, demands the FAB disband at their meeting Nov. 12.

“This is an illegal meeting of an illegal board,” long-time community activist and former Detroit School Board member Marie Thornton countered during public comment. “There is no Public Act 4. There is no Public Act 72. You do not exist!”

Cecily McClellan, vice-president of the city’s Association of Professional and Technical Employees (APTE), told the FAB to clear out.

“The whole board and every position created under the consent agreement, including Kriss Andrews, must leave, cease receiving their salaries, and restore the powers of our elected officials,” McClellan said. “It’s time now to develop a reconstruction plan for Detroit, including the restoration of the Detroit Health, Workforce Development and Human Services Departments.”

She and other speakers said the banks have been the only forces to benefit from PA 4 and the FSA, after devastating the neighborhoods of Detroit and other majority-Black cities in particular with predatory lending and foreclosures.

“We need to hold the banks accountable for what they have done to Detroit,” Stephen Boyle of Free Detroit-No Consent said.  People before banks! Why is our blood shed rather than that of the banks? The risk they’ve created has spread across the entire nation.”

According to city records, Detroit paid $597 million on its $16.9 billion debt to the banks in the previous fiscal year.

FAB chair Pierce’s bank a defendant in national “LIBOR” lawsuit

FAB chair Sandra E. Pierce was previously CEO of Charter One Michigan, a subsidiary of the Royal Bank of Scotland, being sued for rigging interest rates.

FAB chair Sandra Pierce was formerly CEO of Charter One Michigan, a subsidiary of the Royal Bank of Scotland (RBS).

The City of Baltimore, other cities, states, and investors are suing RBS and 12 other global banks in a mammoth federal class action, “IN RE LIBOR-BASED FINANCIAL INSTRUMENTS ANTITRUST LITIGATION,” for rigging rates in interest “swaps.” The plaintiffs contend the banks’ criminal actions have robbed them of billions of dollars that should have been spent on services for their residents.

They allege the banks conspired to “unlawfully manipulate the London Interbank Offered Rate for the U.S. dollar (‘LIBOR’) from August 1, 2007 through such time as the effects of the Defendants’ illegal conduct ceased . . . .”  The banks named are members of the U.S. Dollar LIBOR panel, which set global borrowing rates.

Pierce announced at the beginning of the FAB meeting that the group was going into a “brief” closed session to obtain a legal opinion from its attorneys on the current status of PA4 and the FSA.

Detroit City Council members Gary Brown, Saunteel Jenkins, and Kenneth Cockrel, Jr. herded out of the room along with the FAB to the closed session. The three did not take with them their own Charter-mandated legal counsel. Detroit voters just approved Detroit Proposal C, which cemented Corporation Counsel Krystal Crittendon’s powers to take even the Mayor and Council members to court for City Charter violations.

City Council member Gary Brown (rear l) and former Council member Sheila Cockrel (center), who supports the FSA and the FAB, attended the FAB meeting Nov. 12. Brown and Council members Kenneth Cockrel Jr. and Saunteel Jenkins participated in FAB closed session. In front are Marie Thornton and Wayne Bernard, who both spoke against the banks/state takeover of Detroit.

Brown and Jenkins refused comment when the group returned after two hours. But Council member Andre Spivey, who arrived after the closed session, told VOD, “No, I wasn’t in the session, I’m not a member of the Financial Advisory Board.”

FAB attorneys declare PA repeal restored ‘duty to bargain’

On the group’s return, Pierce read a brief statement claiming the FSA remains intact despite the repeal of PA4, with the exception of “provisions 4.1, 4.3 and 4.4 related to the duty to bargain.” (Click on for FSA terms.)  The statement claimed the remainder of the FSA is valid under Public Act 7.

Detroit Corporation Counsel Krystal Crittendon.

Crittendon is preparing a statement for the City Council on the effects of the PA4 repeal. In earlier opinions, she said clearly that most of the FSA derives from PA 4, and that there is no statutory basis at all, even under PA4, for the existence of the FAB.

Now even the FAB’s legal counsel has gutted a large portion of the FSA, declaring that the roles of Bing, the FAB and Andrews in approving or terminating labor contracts, laid out in FSA sections 4.1 and 4.3, are null and void as a result of the PA4 repeal. They also said that the city’s duty to bargain with its unions under state law, which 4.4 negated, is now restored.

Ironically, City of Detroit Labor Relations Chief Lamont Satchel then reported on the progress of the “City Employment Terms” (CET) unilaterally imposed on city employees by Bing and the FAB July 16. The CET, which should now also be now null and void, includes wage and benefit cuts, work rule changes, layoffs, departmental shutdowns, and attacks on the city’s pension system.

“Progress has continued on CET implementation despite legal and other challenges,” Andrews said in the executive summary of his document. “More than half of the changes have been implemented; the majority of the items are on track to be completed by 1/31/2013.”

As the monkeys indicated, “See no evil, hear no evil, speak no evil.”

The section of Andrews’ document titled “Escrow Release Milestones Status” shows that the state is deliberately restricting Detroit’s revenue from the $137 million loan the city received as part of the consent agreement.

Detroit Mayor Dave Bing and State Treasurer Andy Dillon collude to keep FSA in place.

Mayor Dave Bing said Nov. 13 that he and State Treasurer Andy Dillon had signed a new agreement in the wake of the PA 4 repeal (see link to “Escrow Release Milestones Agreement” at end of story.

In a statement, Bing said, “We are committed to our reform agenda as it is the only way for the City of Detroit to achieve financial stability and to improve the quality of life for our citizens. . . . The Milestone Agreement is a significant tool that will help us succeed in transforming Detroit.”

Dillon echoed the mayor.

:The benchmarks Mayor Bing and I have established provide the city with a transparent roadmap to receive bond proceeds that have been set aside in escrow,” Dillon said. “The funds from the bond proceeds were never intended to fund the status quo in Detroit, but rather aid with its government reforms.  While some progress has been made in the city since the signing of the Financial Stability Agreement in June, it is moving slower than what all parties would have anticipated.  There is still much work to be done.”

The states of New York and New Jersey are suing Ernst & Young, which cooked Lehman Brothers’ books before the company’s collapse, which had a domino effect across the U.S. in 2008.

In order to obtain $20 million November 20 and $10 million December 14 from the so-called “escrow account,” the document says Detroit’s City Council must approve contracts with Milliman, a national firm based in Seattle, Washington which plans to gut the city’s pension system, Ernst & Young, and Attorney Mike McGee of Miller Canfield, a co-author of Public Act 4.

Those contracts are set for a vote at the City Council Committee of the Whole Nov. 20.

Numerous other measures are laid out, including the gutting of the city’s Public Lighting and Transportation Departments. The section also ignores the city’s duty to bargain under state law, as well as Crittendon’s authority under the charter to approve contracts with outside law firms.

City Council meeting Nov. 13 

The following day, residents and union workers and leaders jammed Council chambers to denounce the proposed contract with EMA, which would cut 81 percent of the Detroit Water and Sewerage Department’s workforce (see separate story).

They also took the Council to task for its 5-4 vote for the Fiscal Stability Agreement. Corporation Counsel Crittendon, and Council members JoAnn Watson, Brenda Jones, and Kwame Kenyatta had argued that they should take no action on the agreement until the people’s vote on Public Act 4.

Campaign to repeal Public Act 4 was victorious.

“When do the lies and bullying stop?” asked Ed McNeil, executive assistant to Al Garrett, president of Council 25 of the American Federation of State, County and Municipal Employees (AFSCME).

“We hear we’re going to run out of cash in November and December, we were running out of case in August, July, June, May and April,” McNeil said. “The whole purpose is to lay the basis for another PA 4. Somebody here in Detroit has to stand up. Get the people of Lansing out of the city of Detroit, get rid of the Financial Advisory Board, the Project Management Director and the CFO. Get them the hell out of here. Without them, the city wouldn’t be broke.”

Council 25 funded the campaign to defeat Public Act 4. No other union in the state put money behind it, instead spending hundreds of millions on the unsuccessful campaign for Proposal 2, which would have put the right to collective bargaining into the state’s constitution.

Valerie Burris speaks at City Council Nov. 13, 2012, telling them to stop payment to bondholders until people’s needs are met.

An inside source said those unions claimed the issue of PA 4 was “toxic,” i.e. it related to racial issues because nearly every city under the lash of PA4 has been majority-Black.

Valerie Burris summed up the opinions of many others confronting the Council.

“We must stop being reactionary and begin being revolutionary,” Burris said. “We must put services for the people before bonds. The people are tired and are beginning to raise up. We have to be bold, stop paying the bondholders. What are they going to do? Take us to court? When people are broke, they take care of their families first before they pay their credit card bills. Take care of the people, not the banks!” 

Related documents:

• Click on FAB 11 12 12 for full report presented by Kriss Andrews Nov. 12, 2012.
• Click on escrow_release_milestones for complete description of what the state wants before it gives Detroit its own loan money.
• Click on FSA Consent Agreement 4 4 12 for full text of consent agreement.
• Click on Crittendon opinion 4 1 12 for Corporation Counsel’s advice to Council on FSA.
• Click on  Crittendon May 1 letter for her subsequent analysis of FSA.