Legal money laundering DWSD

[Willi]

It involves a LOAN needing COLLATERAL -and the type of collateral for a city is a sticky widget
--- something pledged as security for repayment of a loan,
to be forfeited in the event of a default.

No one ever expected a City to default on a bond -Thats the Catch 22 because WHAT is put up for forfeit ?
a.) land
b.) buildings,
c.) assets

It's never happened before on this scale in the USA, for a city with nearly 1 million residents.

Do people want the Water Treatment Plant in Detroit to be run by the State ?????????
-- many are mad as hornets that power was usurped away from voters

The financial industry makes no fuss about - Detroit/DWSD defaulted on their bonds -
Now the financial wizards constructed a method of generating NEW credit, on a bad bet to begin with

http://www.hblr.org/2013/03/credit-d...s-instruments/

Swaps aren't looked favorably upon................how much liquidity exists............?
The primary purpose of a bank is to make loans, not speculate.

[Willi]

It all involves collateral - for a loan - from a bank.

An entity needed new credit , so it restructured itself, after a default,
hoping to obtain a new credit line, putting up a dubious form of collateral.

Look Up Credit Swap
http://www.hblr.org/2013/03/credit-d...s-instruments/

The primary purpose of a bank is to make loans, not speculate
“Innovative” financial instruments were responsible for the collapse of the economy in 2008.
Have the State Institutions gone from being investors to being traders in bonds ?

Worth a read -Syncora was burned before -
http://www.bloomberg.com/news/2011-1...y-in-u-s-.html

[jt1]

It all involves collateral - for a loan - from a bank.

An entity needed new credit , so it restructured itself, after a default,
hoping to obtain a new credit line, putting up a dubious form of collateral.

Look Up Credit Swap
http://www.hblr.org/2013/03/credit-d...s-instruments/

The primary purpose of a bank is to make loans, not speculate
“Innovative” financial instruments were responsible for the collapse of the economy in 2008.
Have the State Institutions gone from being investors to being traders in bonds ?

Worth a read -Syncora was burned before -
http://www.bloomberg.com/news/2011-1...y-in-u-s-.html

You still don't know the difference between secured and unsecured. Until you do, stop speaking as if the CoD defaults on unsecured bonds are the same as secured bonds.

Carry on and continue to show your ignorance. It is entertaining.

[jt1]

It involves a LOAN needing COLLATERAL -and the type of collateral for a city is a sticky widget
--- something pledged as security for repayment of a loan,
to be forfeited in the event of a default.

No one ever expected a City to default on a bond -Thats the Catch 22 because WHAT is put up for forfeit ?
a.) land
b.) buildings,
c.) assets

It's never happened before on this scale in the USA, for a city with nearly 1 million residents.

Do people want the Water Treatment Plant in Detroit to be run by the State ?????????
-- many are mad as hornets that power was usurped away from voters

The financial industry makes no fuss about - Detroit/DWSD defaulted on their bonds -
Now the financial wizards constructed a method of generating NEW credit, on a bad bet to begin with

http://www.hblr.org/2013/03/credit-d...s-instruments/

Swaps aren't looked favorably upon................how much liquidity exists............?
The primary purpose of a bank is to make loans, not speculate.

one more key point: DWSD has nor defaulted.

[Willi]

Dear JT1, oh genius one, - what was put up for collateral on the bonds ?
Also explain why a JUNK bond is not considered a default while you're at it.

The three biggest credit raters made a choice,
to lower their grades on the bonds to junk.

Sure some might dabble in JUNK bonds as highly risky speculative markets always exist,
but it is at least 25% below the historic level it once was, and liquidity is horrendous.

Yes, no less than 3 financial institutions , graded the bonds as junk.
Hence the reason for the restructuring, refinancing, etc.

http://www.institutionalinvestorsecu...roit_pens.html

Worth a read, all the way to the bottom - because thats where the good stuff is
http://www.nextchapterdetroit.com/09...ra-settlement/

[corktownyuppie]

one more key point: DWSD has nor defaulted.

Well technically it has. But not because of a lack of funds. The funds which were guaranteed by DWSD are now guaranteed by GLWA. Whenever the guarantor of a bond changes from the original issuer, it is considered a default because the investor may not be amenable to guarantee from Party X when they agreed to one from Party Y.

But in this case, everyone's situation is improved because the new issuer is stronger than the one being replaced.

Again, it is not because a lack of revenue.

[corktownyuppie]

Dear JT1, oh genious one, - what was put up for collateral on the SECURE bonds ?
Also explain why a JUNK bond is not considered a default while you're at it.

The three biggest credit raters made a choice,
to lower their grades on the bonds to junk.

Yes, no less than 3 financial institutions , graded the bonds as junk.
Hence the reason for the restructuring, refinancing, etc.

The bonds were downgraded to junk because the revenue was exposed to creditor risk, not because there isn't enough revenue. Now the creditor risk is eliminated, so why do you believe the bonds will default?

[corktownyuppie]

Or perhaps answer it this way...if there were no risk to non DWSD creditors in the bankruptcy, is it your belief that the bonds would have defaulted?

[Willi]

I think the payments won't be made regularly, on time, continously, and the
""entities"" used as collateral don't cover the intended amounts [[a liquidity issue).

Earlier this year - People could not SEE the financials of DWSD - even when requested !
http://detroitwatersewerblog.blogspo...ing-books.html

unlimited-tax general obligation bonds [[UTGO)
limited-tax bonds [[LTGO),

The sale of nearly $288 million of distributable state aid fourth lien restructured bonds
through the Michigan Finance Authority would help fund the UTGO settlement.
--The bonds would be secured by the city's unlimited-tax GO property tax pledge
and would come fourth in line - after existing Detroit bonds are paid from the city's share of state aid.

Another $55 million of financial recovery bonds, secured by the city's limited-tax GO pledge,
would cover the LTGO settlement. More than two-thirds of the $161 million of outstanding LTGO bonds were held by BlackRock Financial Management or insured by Ambac Assurance Corp, according to city documents.

What exactly is a Pledge worth these days....................?
Is Property Tax the actual collateral ?

To anyone that begins to Pick Apart the Grand Plan, even a little bit,
The Plan seems shaky, tenuous and built on hope rather than hard green money.

Bond documents warn several times
that Detroit is at risk of filing for Chapter 9 bankruptcy again
—in which case, according to the documents―
the water and sewer bonds are subject to
extraordinary optional redemption at par.

[corktownyuppie]

I think the payments won't be made regularly, on time, continously, and the
""entities"" used as collateral don't cover the intended amounts [[a liquidity issue).

Earlier this year - People could not SEE the financials of DWSD - even when requested !
http://detroitwatersewerblog.blogspo...ing-books.html

unlimited-tax general obligation bonds [[UTGO)
limited-tax bonds [[LTGO),

The sale of nearly $288 million of distributable state aid fourth lien restructured bonds
through the Michigan Finance Authority would help fund the UTGO settlement.
--The bonds would be secured by the city's unlimited-tax GO property tax pledge
and would come fourth in line - after existing Detroit bonds are paid from the city's share of state aid.

Another $55 million of financial recovery bonds, secured by the city's limited-tax GO pledge,
would cover the LTGO settlement. More than two-thirds of the $161 million of outstanding LTGO bonds were held by BlackRock Financial Management or insured by Ambac Assurance Corp, according to city documents.

What exactly is a Pledge worth these days....................?
Is Property Tax the actual collateral ?

To anyone that begins to Pick Apart the Grand Plan, even a little bit,
The Plan seems shaky, tenuous and built on hope rather than hard green money.

Bond documents warn several times
that Detroit is at risk of filing for Chapter 9 bankruptcy again
—in which case, according to the documents―
the water and sewer bonds are subject to
extraordinary optional redemption at par.

Maybe I'm misunderstanding, but I'm not seeing your position on this.

Are you saying that DWSD bonds are bad?
Or are you saying that the new GLWA bonds are bad?
And are they bad for the lenders? Or are they bad for the borrowers? They can't be bad for both.

And lastly, even if your position that the GLWA deal is bad for the suburbs and for the state -- which, IMHO, is a plausible position to take -- are you saying that there exists a better option?

Because at the end of the day, I think L Brooks Patterson is putting it best. He's saying that this is hard to swallow, but it's the best deal that will arise out of what is a shi**y situation for all.

- There's no way that building new infrastructure will be better for ratepayers.
- There's no way that privatization will be better for ratepayers.
- There's no way that the judge will order the sale of DWSD so that Detroit loses control of the asset.

So for all the moaning about how audits have been shoddy [[I agree), the historical self-dealing unfair to ratepayers at best [[and straight up fradulent at worst), how mismanagement is killing the system, and how it's unfair that the state and suburbs are paying the price for it...

I agree.
I agree.
I agree.

But here's the thing. When you are in a tough negotiation, and the person across from you has a lot less to lose than you do? You have no leverage.

This is a shi**y deal for the suburbs. But it's the best deal out of a lot of even worse options.

[Willi]

We definitely agree upon the fact the Great Deal isn't all it was hyped to be.
The citizens of Metro-Detroit gained insight into who actually owns the city - the bond holders.
The bond holders call the shots, they get paid at the front of the line, they own the city.

The DWSD currently spends about 1/2 of its budget on DEBT payments
and the other 1/2 on fixed operating costs - Whats left to evolve forward ?
There are distinct limits on the revenue-generating ability of the DWSD;
-- i.e the 4 percent rate increase cap in its first 10 years.
The escalating delinquent account, people making minimum payments[[installments)
and those 60 days out, 90 days out ALL need to be reeled in mighty tight.

Would you bet on Detroit, buy some bonds, with the way this deal is structured....... hmmmmmm

[Willi]

Macomb County Board meeting

http://media.macombgov.org/sites/def...pt_22_GLWA.pdf



9/30/14 [[Tuesday) 9 a.m. Full Board Meeting
- Presentation on GLWA: Focus on Finance;
1 South Main Street, Mount Clemens, MI, 48043


9th floor of the County Administration Building
in the Commissioners' Board Room.


Meeting dates/times are subject to change;
[[586) 469-5125 to confirm schedule.

[motz]

The entire formatting of this stuff screams Alex Jones or 1998 Geocities website that is utilizing frames. Ugghhhhh that makes it very hard to take any of this seriously.

[Willi]

Quite an audience today in Mt. Clemens
http://media.macombgov.org/sites/def...pt_22_GLWA.pdf

9/30/14 [[Tuesday) 9 a.m. Full Board Meeting
- Presentation on GLWA: Focus on Finance;
1 South Main Street, Mount Clemens, MI, 48043

9th floor of the County Administration Building
in the Commissioners' Board Room.

I'm not convinced representatives for the residents in Macomb know "what" they are voting on
--- they have lots of homework before that October vote

All counties must vote by Oct. 10

[Willi]

Investors put in $7.6 billion of orders last month
for Detroit’s $1.8 billion of water and sewer bonds,
which had junk ratings from Moody’s Investors Service.
BloombergBusinessWeek News

[Willi]

Follow through - indeed.............

http://blogs.detroitnews.com/politic...ncil-followed/