Pensioners: TAKE THE DEAL

[BankruptcyGuy]

If I may add a couple of points to this discussion:

1. Libor rigging and the swaps deals have absolutely, positively nothing to do with each other. Libor rigging, as alleged, suggested that traders would get the survey-responders [[Libor is, after all, a survey, and not a government benchmark) to adjust answers to the survey by a few basis points to make money on trades. A basis point is one-one hundredth of one percent--0.01%. The amount the swaps were underwater [[that is, paying a fixed rate higher than the comparable floating rate) to the tune of 5-6%, or 500-600 basis points. The two things have [[virtually) nothing to do with each other.

2. With all due respect to Jerome Goldberg, the city stood a relatively low chance of winning the argument that the swaps would be invalidated. In addition, there is the cost and time of litigation that would follow. Judge Rhodes threw the creditors a HUGE bone by beating on the counterparties [[other side of the swap) the first two times. There is a BIG difference between making a political statement that banks were responsible for the housing crisis [[and that's related to the swaps how, exactly?) and actually proving it in court. If anyone wanted to go there [[and few will, except if they're running for office), the other side might point out that a) in each case of a home loan, there was a borrower taking the money, just like the City was happy to take the loan proceeds from the CoPs, and b) Detroit was ground zero for mortgage fraud, with tens of thousands of fraudulent applications and appraisals and debts that have never been repaid. Judge not, lest ye be judged yourself.

3. I'm pretty sure that I wrote that what might happened has happened: namely, that the pensioners are once again receiving poor advice. They have hired representatives who are experienced with unions and union negotiations, not bankruptcy counsel. Normally, in a union negotiation, a futile negotiation leads to two results for a union: a) you're stuck with the same terms that you had in your previous contract, and b) you can go on strike to force the other side to move. Most times, that's not so bad. In bankruptcy cases, THIS IS NOT WHAT HAPPENS. [[sorry for the screaming) Ask the folks at Hostess. Or countless steel or airline employees. I don't know if the unions don't trust anyone else, or if they don't know any better. But simply holding out for a better deal could leave them as the last holdout, and that person will be given the deal to which the rest of the parties have agreed.

[professorscott]

But simply holding out for a better deal could leave them as the last holdout, and that person will be given the deal to which the rest of the parties have agreed.

That sentence is absolutely critical and deserves to be reposted. The advice to the unions, I think, is: do unto others before they do unto you. And it's actually too late for that now, for the most part; replace "before" with "while" and it's closer to the mid-April truth. And I believe Judge Rhodes has now explicitly stated that the so-called, and delightfully named, cram-down is very much on the table.

[Packman41]

To BK Guy:
As usual, your posts are the most intelligent, fact-filled statements to be read on this topic. You dispel the urban myths and give us the unvarnished truth. And your predictions come true.

I believe your statement that the pensioners have been poorly represented. I agree with you - plus they have been poorly represented for years. We have been reading the exposes' in the FREEP and News for years now.


My fear is that since the pension trustees are in a CYA mode that they will not adequately explain the total situation correctly to the pensioners that will be voting soon. How likely is it that Judge Rhodes will become involved in the explanation process so as to get the pensioners fully informed?

[corktownyuppie]

In bankruptcy cases, THIS IS NOT WHAT HAPPENS. [[sorry for the screaming) Ask the folks at Hostess. Or countless steel or airline employees. I don't know if the unions don't trust anyone else, or if they don't know any better. But simply holding out for a better deal could leave them as the last holdout, and that person will be given the deal to which the rest of the parties have agreed.

I don't know how many US Steels, Northwest Airlines, Delphi, Hostess, etc. we need to see before unions realize that things are not the way they used to be.

Union leadership needs to stop saying "Where the money comes from is not our problem". Certainly they shouldn't take the majority of the blame, let alone the whole blame. But you do have to wonder...when the Firefighters Union was fighting tooth and nail to remove the residency requirement, who did they think was going to replace the lost revenue that would be used to pay their pensions?

And unions aren't the only example:

- People need to learn that breaking into someone else's house is not just a crime, but that it will likely get you killed.

- You can't operate a motor vehicle on Belle Isle when you've had your driver's license suspended 18 times.

- A white mayoral candidate, born to a Republican judge and residing in the suburbs can get an endorsement from a Black Panther and annihilate the competition in a write-in campaign in Detroit.


Things are not going back to the way they used to be. I wonder how long it's going to take for people to realize it?

[Honky Tonk]

[QUOTE=corktownyuppie;430521]I don't know how many US Steels, Northwest Airlines, Delphi, Hostess, etc. we need to see before unions realize that things are not the way they used to be.

Union leadership needs to stop saying "Where the money comes from is not our problem". Certainly they shouldn't take the majority of the blame, let alone the whole blame. But you do have to wonder...when the Firefighters Union was fighting tooth and nail to remove the residency requirement, who did they think was going to replace the lost revenue that would be used to pay their pensions?

And unions aren't the only example:

- People need to learn that breaking into someone else's house is not just a crime, but that it will likely get you killed.

- You can't operate a motor vehicle on Belle Isle when you've had your driver's license suspended 18 times.

- A white mayoral candidate, born to a Republican judge and residing in the suburbs can get an endorsement from a Black Panther and annihilate the competition in a write-in campaign in Detroit.


Things are not going back to the way they used to be. I wonder how long it's going to take for people to realize it?[/QUOTE]

In this town? Decades.....

[Smirnoff]

It's not only the pension, the so called "deal" also includes the total elimination of health benefits [[medical, dental, vision) & life insurance which many cannot afford to pay, especially those injured [[shot, etc) on the job.

[Honky Tonk]

It's not only the pension, the so called "deal" also includes the total elimination of health benefits [[medical, dental, vision) & life insurance which many cannot afford to pay, especially those injured [[shot, etc) on the job.

Health Care "benefits" are being whittled down for every owner/employee situation, except for government elected officials. 50 years ago, you were covered 100%, then came the "small deductible", then that grew into "co-pay", now I'm paying 50% of my medical coverage. Next likely step will be 75%. Everyone's taking a hit these days.

[Wesley Mouch]

Health Care "benefits" are being whittled down for every owner/employee situation, except for government elected officials. 50 years ago, you were covered 100%, then came the "small deductible", then that grew into "co-pay", now I'm paying 50% of my medical coverage. Next likely step will be 75%. Everyone's taking a hit these days.

I am not well-informed here, but why is retiree healthcare coverage a big concern. We have Medicare. We have Obamacare. Combined, don't we socially provide decent coverage? I thought that was the idea. What's the real story?

[Wesley Mouch]

It's not only the pension, the so called "deal" also includes the total elimination of health benefits [[medical, dental, vision) & life insurance which many cannot afford to pay, especially those injured [[shot, etc) on the job.

Again, I am not knowledgeable here... but aren't workplace injuries covered by insurance already? Private employers are required [[mostly) to carry Workmans Compensation insurance for on-the-job injuries. Does this not cover Detroit retirees?

[BankruptcyGuy]

How likely is it that Judge Rhodes will become involved in the explanation process so as to get the pensioners fully informed?

Two answers:

1. Judge Rhodes will be VERY involved with making sure the disclosure statement is accurate and readable, considering the education and experience of the creditor in question. There is a high likelihood that if the statement isn't clear, he'll make them re-submit and start over.

2. The part that's difficult is converting a reduced payment to a particular fund into a reduction in benefit for a particular employee. I'm not sure what role the City has in that, historically, or whether the responsibility falls to the funds themselves.

Question to the pensioners out there: have you received a ballot? Is it clear to you what you're being asked to approve?

[[The unspoken question is, of course, are the pensioners being told that if they don't approve this deal, the outcome will be much, much worse?)

[BankruptcyGuy]

I am not well-informed here, but why is retiree healthcare coverage a big concern. We have Medicare. We have Obamacare. Combined, don't we socially provide decent coverage? I thought that was the idea. What's the real story?

1. Many Police and Fire pensioners did not pay into Social Security. If they did not, they are not eligible for Medicare.

2. Even the Medicare-eligible pensioners were getting supplemental insurance through the City. That will be going away. [[And there is no, repeat no, constitutional protection for health care benefits.)

3. I'm guessing that the stipend being given to non-Medicare eligible employees [[be they too young or never having contributed to SS) isn't close to out-of-pocket costs under Obamacare. And that's this year--I'm hearing 10+% rate increases in year two.

[Cincinnati_Kid]

I just want to know the real story behind Obamacare. I don't have it. The Right says it's too costly for people and their rates will increase every year, to the point it will be unaffordable. The Left says it will eventually even out and the rewards for having healthcare far out weigh the costs. Which one is it? I hear some people are happy with it, and others despise it. So are the pensioners going to be steered into taking it? The Right are sure doing their part to discredit it in all their political advertisements.

[Hermod]

I just want to know the real story behind Obamacare. I don't have it. The Right says it's too costly for people and their rates will increase every year, too the point it will be unaffordable. The Left says it will eventually even out and the rewards for having healthcare far out weigh the costs. Which one is it? I hear some people are happy with it, and others despise it. So are the pensioners going to be steered into taking it? The Right are sure doing their part to discredit it in all their political advertisements.

I am just certain that the law could have been written more clearly and concisely. I don't think anyone really knows what is what with the law. Even the authors don't know what inconsistencies, unintended consequences, and ill-defined terms are in the package.

[Bobl]

I suspect they won't take the deal and will get less in the end, as a result.

[Honky Tonk]

I am just certain that the law could have been written more clearly and concisely. I don't think anyone really knows what is what with the law. Even the authors don't know what inconsistencies, unintended consequences, and ill-defined terms are in the package.

I know two people it helped quite a bit. I've also heard the premiums were outrageous for others. I haven't tried it yet myself.

[Wesley Mouch]

1. Many Police and Fire pensioners did not pay into Social Security. If they did not, they are not eligible for Medicare.

2. Even the Medicare-eligible pensioners were getting supplemental insurance through the City. That will be going away. [[And there is no, repeat no, constitutional protection for health care benefits.)

3. I'm guessing that the stipend being given to non-Medicare eligible employees [[be they too young or never having contributed to SS) isn't close to out-of-pocket costs under Obamacare. And that's this year--I'm hearing 10+% rate increases in year two.

Thanks for the info. I thought that since P&F did their own retirement thing, they might be 'on their own'. Do I recall that they discussed joining SS? Maybe some retirees saw that the trustees weren't trustworthy?

[Smirnoff]

Thanks for the info. I thought that since P&F did their own retirement thing, they might be 'on their own'. Do I recall that they discussed joining SS? Maybe some retirees saw that the trustees weren't trustworthy?

SS is a program you must pay into, not join....P&F paid for their current retirement [[pension). Risking their life everyday for 25+ years on the streets & losing in hourly pay contract arbitration for the last 20 years, they will fight till the last drip of blood.....art is a luxury, pension/healthcare is a necessity.

[Vic01]

...they will fight till the last drip of blood.....art is a luxury, pension/healthcare is a necessity.

Art may be a "luxury" for the "P&F"... but is it really a luxury for the rest of us?
Might want to go read through this thread -
http://www.detroityes.com/mb/showthr...DIA-Collection

Lots of good info, particularly post #12 by erikd -
"You are misunderstanding the difference between a luxury and a productive asset.

While the DIA may seem like just a luxury that the city could easily just do without, that is not the reality. The DIA is an anchor institution that draws business, educational, residential, and tourism investment into the city".

[corktownyuppie]

they will fight till the last drip of blood.....art is a luxury, pension/healthcare is a necessity.

Whom will they fight? Whom are they fighting against?

You are viewing this fight as one with winners and losers, and that is where I believe your opinion is misguided.

This is bankruptcy court. It's not winners and losers. It's losers and losers. Everyone loses, with the exception of the city. But you can argue that the city has been on the losing end for so long, that they've already lost the most of all.

In bankruptcy court, it's a contest to see who loses the least. And generally speaking, the people who take the deals early in the process get the best deals. You want to fight to the last drop? Ok. It means you'll probably get the last...and worst...deal.

Now after bankruptcy ruling is done, you've taken your cut, you wanna march on Lansing or DC to push or a higher governmental entity to make up the difference you've lost? Ok. Maybe we can talk then.

But I honestly believe that the longer you try to fight the city in bankruptcy court, the more you will lose.

Take the Deal before it gets any worse than it already is.

[Wesley Mouch]

SS is a program you must pay into, not join....P&F paid for their current retirement [[pension). Risking their life everyday for 25+ years on the streets & losing in hourly pay contract arbitration for the last 20 years, they will fight till the last drip of blood.....art is a luxury, pension/healthcare is a necessity.

Of course. If they'd joined the SS system, then they would have paid into this very large pension plan -- rather than believing they could do better on their own. Turns out they couldn't. Turns out the came late to caring about their pensions. They should have cared to toss out bums who were giving money away to current workers. Cared when they agreed to absurdly early retirements for many who could yet be productive. Cared when their leaders didn't behave prudently. Cared when current workers got incredible pay increases for many years.

[248lurker]

I just want to know the real story behind Obamacare. I don't have it. The Right says it's too costly for people and their rates will increase every year, to the point it will be unaffordable. The Left says it will eventually even out and the rewards for having healthcare far out weigh the costs. Which one is it? I hear some people are happy with it, and others despise it. So are the pensioners going to be steered into taking it? The Right are sure doing their part to discredit it in all their political advertisements.

I had to get an ACA-compliant plan when my prior individual plan was cancelled. My current policy [[which I tried to select to be as close as possible to my previous coverage) was set to cost less than what I paid before. I was also eligible for a subsidy, so that lowered the price even more. With what I'm saving in monthly premium costs, I've been able to start putting aside more money each month into savings, retirement, etc.

The only drawbacks so far is that it seems to pay less for routine office visits [[It paid less than $2 on my last office visit) and the co-pays for my prescriptions seem to be a bit higher the last time I refilled them. Fortunately, I qualified for a reduced deductible and maximum out of pocket limit.

I'd like to think I'm in decent health for my age, so I don't know what to expect in terms of cost if I was hospitalized. Goodness willing, I'll never have to find out.

All that said...

Is the law as-is perfect? No.

Should it be tweaked and fine-tuned over time as we learn more about having this form of universal coverage? Definitely.

Do I want the Republicans to repeal the ACA the first chance they get? No way.

Just my two cents. Others' experiences may vary.

[Wesley Mouch]

I've thought about it, and I think the pensioners should fight to the death.

Then when its all over, and they get little to nothing .... future municipal workers will realize that its time to stop screwing the dead corpse of their cities and start caring about municipal finances and pension funding -- and look to themselves and not to others to magically save them at taxpayer expense.

So fight! Fight on! Go for broke!

[corktownyuppie]

...enormous pressure on the General Retirees. Grand Bargain goes away unless both the PFRS and GRS both approve the plan.

The PFRS pension cuts were only going to be 6%, so it's a little more feasible to keep cuts at 0%. GRS pension cuts were going to be 20%+. Will be interesting to see where they end up.

The deal with the retiree association comes as mediation continues with the Detroit Retirement Systems — which control the city’s pension fund assets — and the U.S. government-appointed Official Committee of Retirees.

http://www.freep.com/article/20140415/NEWS01/304150090/Detroit-bankruptcy-pension-deal-Kevyn-Orr