Largest protest yet includes numerous unions, community groups
Retiree creditors add hundreds more objections to Plan of Adjustment, call for NO vote
Amended POA threatens further attacks, up to 60 percent cuts in pensions, annuities, health care; plans to remove Retirement Board trustees
April 1, 2014
DETROIT –During a massive march April 1 outside the city’s federal courthouse, the site of bankruptcy hearings, Detroit residents, retirees, and union and community leaders announced plans to shut the city down May 1. The protest against Detroit Emergency Manager Kevyn Orr’s bankruptcy filing was the largest yet.
“No pension, No peace,” protesters chanted. “Let me hear you scream, May 1, Shut it Down!”
A yellow flier distributed at the rally, with multiple endorsers, asked Detroiters, “Do not shop, go to work, buy lottery tickets, alcohol or anything.” The flier condemns the undemocratic “emergency management” of Detroit and other majority-Black cities across Michigan, which paved the way for the Detroit bankruptcy filing. It says the action will start at United Auto Workers Local 600 headquarters at 10550 Dix Ave. in Dearborn, Michigan at 8 a.m. May 1.
“Two weeks ago Detroit Emergency Manager Kevyn Orr told the media he felt the Plan of Adjustment, meant to cut our throats, would go through very easily because there is ‘very little social unrest,’” said Dave Sole, of the Stop the Theft of Our Pensions Committee. “But here today we have many veterans of the civil rights movement, union veterans, people who helped stop the Vietnam War. There are enough of us retirees, workers and residents who can shut down the City-County Building, shut the court down, block all the streets, go over to GM’s Renaissance Center, to Chase Bank and others, and shut the m-f’s down.”
Speakers said they were enraged by Orr’s amended Plan of Adjustment and Disclosure Statement filed May 31. It ramps up attacks on pensions, threatening further cuts if retirees do not vote for the plan, and sets out a plan to get rid of current retirement board trustees so Orr and the state can raid the pension plans without opposition from the duly elected trustees.
“It’s talking about at least a 60 percent cut in retiree benefits, and now they’re going after our annuities,” said Mike Mulholland, Vice-President of the Detroit Water and Sewerage Department’s AFSCME Local 207.
“It’s not about fixing Detroit’s streetlights, but about taking over Belle Isle, the Public Lighting Department, the Water Department, City Airport. The fix has been in from the beginning. Millions and millions of dollars are being spent on bankruptcy consultants, while they are not doing one thing to rebuild Detroit. Who can survive these cuts? We might as well move to the cemetery, open up a coffin and lay down. But we must stand deep and fight!”
Tina Person, also known as the “East Side Lady,” said “We need Django in the City of Detroit,” referring to the popular movie “Django Unchained.” Starring Samuel Jackson and Jamie Foxx, it depicts a former slave joining forces with a bounty hunter to track down outlaw slave traders.
“They are giving everything away that belongs to the people of Detroit,” Person said. “We must take our city back. The City Council, which just gave away Joe Louis Arena, should be run out of town on a rail.” (Video below by Morris Mays.)
Rev. Charles Williams Sr. of the National Action Network said, “We are here to tell our young people this is where we came from. If you want justice, stand up and fight back! On May 1, shut this city down! Get out in the community, talk to everyone on the phone, get involved! This is not a game. Save the children, save the babies, save humanity from the corporations, from the Koch Brothers, who are trying to take over cities all across America. Let the world know, let the whole country come—on May 1, shut it down!”
Orr’s POA and Disclosure Statement particularly target retiree annuities, also administered by the city’s Retirement Systems. Annuities are savings plans supplement pensions, are were built up by city workers’ contributions over the years and invested by the retirement systems to earn more money. As do many private plans which offer even higher fixed rates of return, city annuities have paid a guaranteed annual rate of return of case 7.9 percent, despite market rate fluctuations.
Ben Bernanke, chairman of the Federal Reserve, has much of his wealth tied up in two private annuities, one with a fixed rate of return and one variable.
But Orr claims the use of fixed rates was irresponsible, and that annuities should be tied only to “market rates” of return. He wants thereby to recoup large portions of workers’ annuities paid out from 2003-2013, adding to the 34 percent he also wants to cut from workers’ pensions. To do so, he proposes to remove the current trustees of the city’s retirement systems and replace them with appointed “experts.”
Below is a chart from http://financeandinvestments.blogspot.com, part of a series of charts showing rates beginning with the year 1926. The charts show that the average S&P 500 annual rates of return for private annuities from 1926 through 2011 were 9.77 percent. Over the last 20 years, the S&P 500 averaged 7.81 percent. (See What rate of return should you expect to earn on your investments.)
The Detroit General Retirement System’s guaranteed rates of return for annuities have been 7.9%, very closely approximating the S&P 500 market rate.
S&P 500 RATES OF RETURN 1992-2011 AVERAGED 7.81%
Additionally, the Lehman Aggregate Bond Index was used by the retirement systems as well as 90 percent of businesses for years before the company’s catastrophic collapse in 2008, which set off a global economic meltdown stemming from Wall Street’s unbridled predatory lending practices. Any fluctuations in Detroit General Retirement System rates of return should be investigated for their connection to this index.
Ernst & Young, Lehman Brothers’ bookkeepers, are one of several City of Detroit consultants on the bankruptcy plan, being paid millions by Detroit taxpayers. They are being sued by the states of New York and New Jersey for losses they suffered due to investments recommended by Lehman Brothers.
In the same fashion, UBS AG and Bank of America, which hold billions of Detroit’s debt, and numerous other members of the London Interbank Offered Rate (LIBOR) board, fraudently manipulated interest rates world-wide so the banks could profit. They are facing criminal and civil charges across the world, including a $1.5 billion penalty paid to the U.S. Department of Justice.
But Orr’s Plan does not demand that UBS AG or BOA return one penny of the original, predatory and fraudulent $1.5 billion Pension Obligation Certificate loan they foisted on the City of Detroit beginning in 2005. Standard and Poor’s and Fitch Ratings recommended the loans, and Detroit CFO Sean Werdlow took a top position with minority lender Siebert, Brandford and Shank, backed by Bank of America/Merrill Lynch, five months later. He is currently the company’s COO.
Although the City of Detroit filed suit against the phony Retirement System Corporations set up to handle the POC’s, Bankruptcy Judge Steven Orr has never heard the suit. Instead, the day after the demonstration, he approved an $80 million payment to UBS AG and BOA to settle their claims on lesser interest swap agreements related to the POC’s. That approval cuts off the City’s ability to recoup the entire POC debt.
After the rally at the courthouse, protesters marched to the offices of the U.S. Bankruptcy Court at 211 W. Fort St., where hundreds lined up to file more objections to Orr’s Plan of Adjustment and Statement of Disclosure. March organizers encouraged people to continue filing, saying the deadline is now April 28, 2013.
More analysis from VOD on the bankruptcy case will be forthcoming.
Download flier at May 1 Shut Down Detroit flier.
Download Orr’s revised Plan of Adjustment, filed March 31, 2014, at DB amended POA 3 31 14 and revised Disclosure Statement by going to http://www.mieb.uscourts.gov/sites/default/files/detroit/docket3382.pdf.