Nolan Finley thinks Detroit hasn't sufficiently paid for the sins of filing bankrupt.

But he expresses sympathy for the pain bore by the banks as a result of Detroit's bankruptcy. He also suggests that the city should have been liquidated:

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And as the Chapter 9 filing played out, it was held mostly harmless from its own mismanagement, incompetence and corruption.

That may not have been the best outcome.

Instead of Detroit facing its mistakes, those who loaned it money over the years, for reasons good and questionable, paid the price for 60 years of denial and neglect.

Roughly $7 billion in debt was erased. Very few of Detroit's creditors walked away whole; most took haircuts ranging from 14 cents to 86 cents on the dollar.

Nobody weeps for banks and bond houses. Indeed, the protest signs bore the message, "Make the Banks Pay!"

Money lenders have never been popular — until someone needs a loan.

In Detroit, creditors, as they typically are, were vilified as greedy corporate exploiters who wanted to rob the city of its jewels and steal food from the pantries of its retirees.

But what did these financial institutions actually do? They loaned money to the city when it asked for it, and then expected to be paid back.

http://www.detroitnews.com/story/opinion/columnists/nolan-finley/2014/11/09/finley-banks-paid-detroit-bankruptcy/18667677/

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Originally Posted by iheartthed

But he expresses sympathy for the pain bore by the banks as a result of Detroit's bankruptcy. He also suggests that the city should have been liquidated:

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This column is a reminder as to why Finley is not to be taken seriously.

Detroit is not a business. You can liquidate a business [[not that bankrupt businesses are always liquidated) and transfer the assets to other entities. If there were other entities that wanted to assume responsibility for Detroit, that might be an option, but so far as I know there are no such entities, so there is no resolution that is analogous to a business liquidation. The Michigan constitution also doesn't have any provision for such a thing.

People who were lending money to Detroit anytime in the past 30 years should have known that Detroit wasn't a great credit risk. They should have [[and did) charged Detroit higher interest rates as a consequence of that risk. That's what lenders do, and that's how lending works. Sometime a loan goes bad, and that is part of the business.

The banks should be made to pay for blight removal throughout the city.

What an asshole. If he doesn't think we're being punished enough he should come and live here and see for himself [[of course, having that asshole living here would be even more punishment for us).

Banks didn't lose much in the bankruptcy, it was the entities that insured the bonds against default that paid the price. My DWSD bonds were paid at par because of the underlying insurance.

My regret is that Orr didn't use his opportunity to suspend civil service protections and do a number on the over-staffing and under-performing in the various city departments while he had the authority.

I think the whole banks off with only X cents on the dollar is disingenuous because it ignores interest payments. A bank might walk off with only "$0.70 on its dollar", but if it had successfully charged Detroit with exorbitant interest rates while the debt was carried, the bank probably made a pretty nice profit on its loans. Banks don't charge sketchy lenders high interest rates for fun. It's part of a legitimate business model, and probably most of the banks made a profit off of Detroit in the end [[or are going to).

If anything, what Nolan wrote is like a reverse psychology fluff piece. The main "takeaway" is that Detroit really screwed those poor banksters over. We should be happy.

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Originally Posted by nain rouge

If anything, what Nolan wrote is like a reverse psychology fluff piece. The main "takeaway" is that Detroit really screwed those poor banksters over. We should be happy.

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Well, in the short term sure. But next time Detroit needs to borrow to fund something, will there be any capital available at anything approaching reasonable terms? Something lost in the hackishness of the article is the very real problem of very little structurally changing.

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Originally Posted by EastsideAl

What an asshole. If he doesn't think we're being punished enough he should come and live here and see for himself [[of course, having that asshole living here would be even more punishment for us).

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That's kind of what I thought when I read it. He acts as if it's sunshine and rainbows in Detroit, just with $7B less debt.

Shame on Detroit leaders, and shame on the banks for lending money to Detroit when it was in such bad financial state.

I wonder how Finley felt when the baking industry collapsed our economy and sent us into a deep recession and had to be bailed out on the backs of the people.

I wonder what Nolan Finley thinks of Donald Trump and his perpetually bankrupt self. I strongly doubt he'd criticize Trump in the same manner that he'd criticize Detroit, and Trump is someone who absolutely without a doubt abuses the system

On top of that, no one weeps for those who invest their money poorly. At least, no one should. Because if you make a poor investment and are given the chance to do the properly research, there is no excuse besides "I made a bad decision". Finley and others are the types who don't think that markets that take risks or behave poorly/illegally [[see mortgage fraud and the financial crisis) should have to face the consequences for their actions. Syncora and FGIC willingly backed the deal, and if they didn't know what they were getting into, that's their fault. It doesn't matter what documents they were given, if they were lied to... All they had to do was visit Detroit. Nothing more.

Nolan Finley is an ass. No more, no less. Less is what I would like to see/read

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Originally Posted by motz

I wonder what Nolan Finley thinks of Donald Trump and his perpetually bankrupt self. I strongly doubt he'd criticize Trump in the same manner that he'd criticize Detroit, and Trump is someone who absolutely without a doubt abuses the system

On top of that, no one weeps for those who invest their money poorly. At least, no one should. Because if you make a poor investment and are given the chance to do the properly research, there is no excuse besides "I made a bad decision". Finley and others are the types who don't think that markets that take risks or behave poorly/illegally [[see mortgage fraud and the financial crisis) should have to face the consequences for their actions. Syncora and FGIC willingly backed the deal, and if they didn't know what they were getting into, that's their fault. It doesn't matter what documents they were given, if they were lied to... All they had to do was visit Detroit. Nothing more.

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So, basically, it's OK for Detroit leaders to scam the banks and Detroit should not in anyway be held responsible for that scamming.... but banks should bear the full brunt of the mortgage meltdown?
being a tad inconsistent aren't you?

I haven't read the article yet -- I will do so.

But my reaction to the posts here is that the headline fits. Posters are blaming banks. They are not blaming themselves. QED.

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Originally Posted by bailey

So, basically, it's OK for Detroit leaders to scam the banks and Detroit should not in anyway be held responsible for that scamming.... but banks should bear the full brunt of the mortgage meltdown?
being a tad inconsistent aren't you?

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I think the banks had a more nuanced view of what could be gained from loaning to a city in terminal financial decline. Look at this way: if you collect $20 million in interest and later receive $20 million back on your original $30 million loan in bankruptcy court, you made a tidy profit. I'm sure such scenarios weren't lost on the banks. They knew Detroit was more likely than not to make minimum payments for as long as possible - rather than pay down its debt - and structured deals accordingly.

Probably some banks took more obscene risks, but those lenders knew what they were getting into and were willing to gamble.

Let's also not forget the de facto "collateral" some of the banks collected during the bankruptcy proceedings, such as the parking garage deal. But let's hear some more propaganda about how the banks were screwed. That way we won't even dare think the borrower was screwed.

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Originally Posted by iheartthed

But he expresses sympathy for the pain bore by the banks as a result of Detroit's bankruptcy. He also suggests that the city should have been liquidated:

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i think you are all misinterpreting this piece. Hes just stating facts and how this would have gone differently if the city were a business. The end result is we should all be grateful things turned out the way they did.

Don't let your personal dislike for the man cloud the real meaning of his story, and he never said the city should have been liquidated. He only suggested that is what the creditors were demanding.

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Originally Posted by nain rouge

Let's also not forget the de facto "collateral" some of the banks collected during the bankruptcy proceedings, such as the parking garage deal. But let's hear some more propaganda about how the banks were screwed. That way we won't even dare think the borrower was screwed.

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I think there are far too many people focused on extracting punishment from the Banks rather than the important issues of still having a city that is half empty, blighted, with an extremely poor populace, and massive problems that aren't solved because the banks took a haircut.

Banks were the convenient boogeyman. Now that they have been dealt with, the hard work begins. I think that is the point buried in Nolan's article.

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Originally Posted by bailey

I think there are far too many people focused on extracting punishment from the Banks rather than the important issues of still having a city that is half empty, blighted, with an extremely poor populace, and massive problems that aren't solved because the banks took a haircut.

Banks were the convenient boogeyman. Now that they have been dealt with, the hard work begins. I think that is the point buried in Nolan's article.

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If that's what he meant then he should have said that, no? I think most in and around Detroit would agree that there is much work to be done. I don't think most in and around Detroit would agree that Detroit hasn't suffered far more than any bank under the factors that led it into bankruptcy, which is what Finley seems to suggest.

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Originally Posted by hewettbr

i think you are all misinterpreting this piece. Hes just stating facts and how this would have gone differently if the city were a business. The end result is we should all be grateful things turned out the way they did.

Don't let your personal dislike for the man cloud the real meaning of his story, and he never said the city should have been liquidated. He only suggested that is what the creditors were demanding.

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^^^^THIS^^^^ That was my take also. The process could have been so much worse and with much worse results.

If you have not already done so, then take the time to read the ENTIRE Free Press Special Section http://www.freep.com/longform/news/l...yder/18724267/ After you read it then ask yourself that if the team of "adults in the room" were absent from the process would we have the result we have today?

My guess is that the ideologues would still be bickering and we would not be exiting bankruptcy today.

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Originally Posted by iheartthed

If that's what he meant then he should have said that, no? I think most in and around Detroit would agree that there is much work to be done. I don't think most in and around Detroit would agree that Detroit hasn't suffered far more than any bank under the factors that led it into bankruptcy, which is what Finley seems to suggest.

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I'm not sure if the suffering leading up to Bankruptcy is the issue. The point is the banks [[rightly, IMHO) took a substantial haircut but, the citizens of Detroit aren't going to see anything but BETTER services and maybe even lower taxes for those services [[hopefully). I think there is a the legit point here... if the total burden falls on the lenders and non-resident retirees, where is the impetus for Detroit politicians to make the hard changes so that Detroit doesn't end up right back where it was?

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Originally Posted by bailey

I'm not sure if the suffering leading up to Bankruptcy is the issue. The point is the banks [[rightly, IMHO) took a substantial haircut but, the citizens of Detroit aren't going to see anything but BETTER services and maybe even lower taxes for those services [[hopefully). I think there is a the legit point here... if the total burden falls on the lenders and non-resident retirees, where is the impetus for Detroit politicians to make the hard changes so that Detroit doesn't end up right back where it was?

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But bankruptcy was the means to an end, since the city was starving services to service debt payments. The citizens were already feeling that pain and the bankruptcy spread that pain to the banks, as it should.

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Originally Posted by iheartthed

But bankruptcy was the means to an end, since the city was starving services to service debt payments. The citizens were already feeling that pain and the bankruptcy spread that pain to the banks, as it should.

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Bankruptcy IS a means to an end because usually EVERYONE gets dinged and everyone changes behavior afterwards. The individual gets to keep their house and have the second mortgage stripped, but they lose the classic car and the cottage. The bank loses money and the debtor isn't going to get any credit anywhere for 10 years...etc.

What he's saying [[and is lost in his smarm) is there is substantial moral hazard here for the political class if the total cost of the last 60 years of incompetence is laid at the feet of the banks and city retirees who live elsewhere. Now they are "flush" there is no impetus on Detroit political leaders to make the choices that will prevent insolvency again because the voters don't care because all they see is better services and lower taxes.

They've stripped the liens...and slayed the evil bank fat cat bogeyman. great, the "what now" is the issue. If it's back to business as usual because hey, now there's a heap of new bond money... then the whole thing was for naught and we should just pack it up.

It's Donald Trump in municipal form. next time there won't be a grand bargain to bail out retirees with a 4.5% cut and a 20% cap.... pensions will just be gone altogether.

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I think there is a the legit point here... if the total burden falls on the lenders and non-resident retirees, where is the impetus for Detroit politicians to make the hard changes so that Detroit doesn't end up right back where it was?

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First, there have been quite a few changes already. The number of city employees is down quite a bit, benefits have been reduced, and salaries have been cut.

Second, that is why there is a financial oversight board.

Third, what is the alternative? Providing even fewer services to the population of Detroit? Assuming that were actually possible, how would that be a good idea?

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Originally Posted by bailey

...because the voters don't care because all they see is better services and lower taxes.

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Sort of like the federal government and American voters, eh? I don't know how we can act all high and mighty about Detroit when we treat our own national government like a bottomless piggy bank.

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Originally Posted by mwilbert

First, there have been quite a few changes already. The number of city employees is down quite a bit, benefits have been reduced, and salaries have been cut.

Second, that is why there is a financial oversight board.

Third, what is the alternative? Providing even fewer services to the population of Detroit? Assuming that were actually possible, how would that be a good idea?

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City employees are down and costs are down because it was at the point of a gun.... now that gun has been holstered? I guess we're leaving it up the FAB. Ok, how long before the FAB is just the overseer of the plantation and the man is keeping Detroit jewels for suburban interests?

The issue is there is no discussion about alternatives... its all about getting out of Bankruptcy and getting back to normal. "Normal" is what got Detroit to bankruptcy.

It seems to me there is a lot of ball spiking because of a belief that exiting BK was the goal line...when in fact it was only the 35 yrd line.

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Originally Posted by bailey

Bankruptcy IS a means to an end because usually EVERYONE gets dinged and everyone changes behavior afterwards. The individual gets to keep their house and have the second mortgage stripped, but they lose the classic car and the cottage. The bank loses money and the debtor isn't going to get any credit anywhere for 10 years...etc.

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How is this any different from Detroit's situation? If the banks could do better then why did they settle? And what provision of any law forces the banks to do business with Detroit in the future?

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Originally Posted by iheartthed

How is this any different from Detroit's situation? If the banks could do better then why did they settle? And what provision of any law forces the banks to do business with Detroit in the future?

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there is no provision that stops banks from doing business with Detroit... I would prefer there actually was one because there similarly is no provision for detroit leaders [[outside the somewhat undefined FAB) to mortgage the place to the hilt and beyond again.

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Originally Posted by bailey

there is no provision that stops banks from doing business with Detroit...

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Is there one that requires a bank to not do business with an individual who files bankrupt?

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Originally Posted by iheartthed

Is there one that requires a bank to not do business with an individual who files bankrupt?

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No.. which is why you get repeat offenders like Trump... [[or a particularly shifty relative of mine). very few places are going to touch you for 7-10 years after a bankruptcy and those that do tend do it at insane rates.

The one tiny thing I see in agreement with Nolan here is that there seems to be relatively little incentive to keep the political class from committing the same sins because most people are going to see an improvement in their lives... it's a weird dichotomy in this municipal BK situation. Hey, who cares about these bonds to cover operating expenses, no need to address the fact we have a city with physical infrastructure built out for 2 million people with less than 700k living here...etc. ... we can just wipe them in BK 10 years from now

WHAT IF - what if - somehow, someway, the banks and the city made out good on the deal, and the city was able to give pensioners a good kick in the teeth? Why is that such an impossible scenario to believe? Bank of America got Detroit to agree a ridiculous debt swap, for example, and collected way more interest over the years than it would have otherwise. All Detroit did was negotiate that highway robbery by BoA down to a more manageable number.

Of course, the sensationalist press reports that as BoA generously taking $0.crap on the dollar, but the reality is WAY more complicated. If you ask me, it looks like BoA made out decently in that deal. It's getting about as much from Detroit as it can realistically afford to give. I mean, c'mon, these banks weren't stupid when they presented a financially desperate Detroit with an interest rate swap.

The reporting going on is horrendous.

Detroit has agreed to pay debts that consensus opinion has deemed illegal debts. The banks are not getting taken to cleaners. Let's use some critical thinking skills here, people.

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Originally Posted by bailey

City employees are down and costs are down because it was at the point of a gun.... now that gun has been holstered? I guess we're leaving it up the FAB. Ok, how long before the FAB is just the overseer of the plantation and the man is keeping Detroit jewels for suburban interests?

The issue is there is no discussion about alternatives... its all about getting out of Bankruptcy and getting back to normal. "Normal" is what got Detroit to bankruptcy.

It seems to me there is a lot of ball spiking because of a belief that exiting BK was the goal line...when in fact it was only the 35 yrd line.

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True the big challenge is still ahead;

Reducing crime
Improving schools
Improving all city services while cutting expenses
How about lowering tax rates to attract more tax revenue?

Nolan comes off as a bit of a jabrone, but he gets paid to write the shit he writes. I wonder if he even believes half the shit that he puts into his columns.

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Originally Posted by bailey

City employees are down and costs are down because it was at the point of a gun.... now that gun has been holstered? I guess we're leaving it up the FAB. Ok, how long before the FAB is just the overseer of the plantation and the man is keeping Detroit jewels for suburban interests?

The issue is there is no discussion about alternatives... its all about getting out of Bankruptcy and getting back to normal. "Normal" is what got Detroit to bankruptcy.

It seems to me there is a lot of ball spiking because of a belief that exiting BK was the goal line...when in fact it was only the 35 yrd line.

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Bankruptcy avoided tough decisions. Tough would have been tearing up every union contract, firing everyone, and privatizing everything -- oh, and no pensions whatsoever -- until a 100% new city structure could be rise from the ashes like a Phoenix.

People here act like Nolan is a fool because he doesn't agree with the progressive logic that Detroit's problem is just a revenue problem. It was also a spending problem. Restoring every program from before the fall will just be setting up round 2.

Detroit is very lucky have been the first major city down this road. It will be different for the 10th city. There'll be no NYTimes coverage, nor love from the major media or politicians. There will be more bankruptcies, and it will get ugly.

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Originally Posted by bailey

I'm not sure if the suffering leading up to Bankruptcy is the issue. The point is the banks [[rightly, IMHO) took a substantial haircut but, the citizens of Detroit aren't going to see anything but BETTER services and maybe even lower taxes for those services [[hopefully). I think there is a the legit point here... if the total burden falls on the lenders and non-resident retirees, where is the impetus for Detroit politicians to make the hard changes so that Detroit doesn't end up right back where it was?

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So, you would prefer we received WORSE services [[which would have to be no services at all) and higher taxes [[on what is already the poorest population of a major city in the U.S.), so we can feel sufficiently "punished" for forcing BofA to take a little less profit on their fixed swap deal? Yessir, that's a real recipe for recovery. That should teach a lesson to all those entitled Detroit citizens prospering off of this bankruptcy!

So, you're really as bad as that asshole Finley. Screw you too.

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Originally Posted by EastsideAl

So, you would prefer we received WORSE services [[which would have to be no services at all) and higher taxes [[on what is already the poorest population of a major city in the U.S.), so we can feel sufficiently "punished" for forcing BofA to take a little less profit on their fixed swap deal? Yessir, that's a real recipe for recovery. That should teach a lesson to all those entitled Detroit citizens prospering off of this bankruptcy!

So, you're really as bad as that asshole Finley. Screw you too.

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again someone who just hates Finley and doesn't understand the point. No one wants the city to suffer, no one wants the city to fail, but if there is no negative reinforcement for the mistakes that were made people tend to not change how they operated. This is a major issue not only in municipal bankruptcy but also personal bankruptcy. The goal is a fresh start but also a chance to change, so it doesn't happen again.

Sorry if you dont like that opinion but it happens to be the truth. Avoiding the truth is what Detroit did for four decades. We all know how it turned out.

We need to look at what has happened here as a blessing and do everything in our power to never get in that position again. The article is trying to convey that message to the reader by stating how it could have been much worse.

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Originally Posted by bailey

The issue is there is no discussion about alternatives... its all about getting out of Bankruptcy and getting back to normal. "Normal" is what got Detroit to bankruptcy..

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What kind of alternatives are you talking about? We just went through a pretty detailed study of the city's costs and revenues as part of the bankruptcy proceedings. If you think there are some large opportunities for improvement that were missed there, it might be helpful to let everyone else know.

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Originally Posted by Wesley Mouch

Detroit is very lucky have been the first major city down this road. It will be different for the 10th city. There'll be no NYTimes coverage, nor love from the major media or politicians. There will be more bankruptcies, and it will get ugly.

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Detroit isn't the first municipal bankruptcy. It was the biggest.

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Originally Posted by hewettbr

again someone who just hates Finley and doesn't understand the point. No one wants the city to suffer, no one wants the city to fail, but if there is no negative reinforcement for the mistakes that were made people tend to not change how they operated. This is a major issue not only in municipal bankruptcy but also personal bankruptcy. The goal is a fresh start but also a chance to change, so it doesn't happen again.

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This is a ridiculous argument. To whom are you trying to teach a lesson? The people who ran the city as it declined are gone. They aren't in charge of anything anymore. Most of them are dead. You can't punish them, or discourage them from future bad behavior. Kwame is already in jail. For that matter, most of the residents who voted for them are dead or gone too. Can't teach them anything either.

And even if you wanted to discourage the people living in the city from voting for people who do things you don't like in the future, how is that supposed to work? Those people can leave too. Or do you think it is somehow appropriate just to disadvantage the very old and very poor who cannot leave if you try to teach them the error of their ways? The whole idea is at the same time absurd and repulsive.

Because cities are made up of people who can avoid responsibility for financial mismanagement by leaving, you need to have rules about what cities can do, and oversight to make sure those rules are followed. Michigan did not do a good job of this previously. Hopefully it will do a better job in the future, and at least in the case of Detroit that should be the case.

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Originally Posted by hewettbr

again someone who just hates Finley and doesn't understand the point. No one wants the city to suffer, no one wants the city to fail.

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Well, that's where you and I disagree at the start. I think Mr. Finley [[like a lot of people in our surrounding communities and our state) wanted both of those things, and is showing his disappointment here that it didn't end up as badly, and as restrictive of the remaining democratic rights of Detroit citizens, as he had hoped.

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Originally Posted by mwilbert

This is a ridiculous argument. To whom are you trying to teach a lesson? The people who ran the city as it declined are gone. They aren't in charge of anything anymore. Most of them are dead. You can't punish them, or discourage them from future bad behavior. Kwame is already in jail. For that matter, most of the residents who voted for them are dead or gone too. Can't teach them anything either.

And even if you wanted to discourage the people living in the city from voting for people who do things you don't like in the future, how is that supposed to work? Those people can leave too. Or do you think it is somehow appropriate just to disadvantage the very old and very poor who cannot leave if you try to teach them the error of their ways? The whole idea is at the same time absurd and repulsive.

Because cities are made up of people who can avoid responsibility for financial mismanagement by leaving, you need to have rules about what cities can do, and oversight to make sure those rules are followed. Michigan did not do a good job of this previously. Hopefully it will do a better job in the future, and at least in the case of Detroit that should be the case.

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Boy you depressed my day. I think maybe I'll play the tune from Annie all day. You know the one, Tomorrow. It;s only a day away,

Gott in Himmel. Detroit is no dead dog. Quite kicking us.

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Originally Posted by sumas

Boy you depressed my day. I think maybe I'll play the tune from Annie all day. You know the one, Tomorrow. It;s only a day away,

Gott in Himmel. Detroit is no dead dog. Quite kicking us.

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Your reaction makes me think you didn't understand what I wrote. Whether that is a problem with your reading or my writing or a combination I'm not sure. What do you see as the kicking?

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Originally Posted by mwilbert

This is a ridiculous argument. To whom are you trying to teach a lesson? The people who ran the city as it declined are gone. They aren't in charge of anything anymore. Most of them are dead. You can't punish them, or discourage them from future bad behavior. Kwame is already in jail. For that matter, most of the residents who voted for them are dead or gone too. Can't teach them anything either.

And even if you wanted to discourage the people living in the city from voting for people who do things you don't like in the future, how is that supposed to work? Those people can leave too. Or do you think it is somehow appropriate just to disadvantage the very old and very poor who cannot leave if you try to teach them the error of their ways? The whole idea is at the same time absurd and repulsive.

Because cities are made up of people who can avoid responsibility for financial mismanagement by leaving, you need to have rules about what cities can do, and oversight to make sure those rules are followed. Michigan did not do a good job of this previously. Hopefully it will do a better job in the future, and at least in the case of Detroit that should be the case.

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To answer your first question : the region. Just because those in the past were to "blame" it doesn't mean that the current and future leaders wont go down the same path. I am not trying to to defend or attack anyone with my analysis, im just trying to state my opinion and interpretation on the piece.

I also did not say anything about making people suffer. I want and hope the city and its neighborhoods benefit from this who ordeal, i think you may have misinterpreted my comments.

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Originally Posted by nain rouge

WHAT IF - what if - somehow, someway, the banks and the city made out good on the deal, and the city was able to give pensioners a good kick in the teeth? Why is that such an impossible scenario to believe? Bank of America got Detroit to agree a ridiculous debt swap, for example, and collected way more interest over the years than it would have otherwise. All Detroit did was negotiate that highway robbery by BoA down to a more manageable number.

Of course, the sensationalist press reports that as BoA generously taking $0.crap on the dollar, but the reality is WAY more complicated. If you ask me, it looks like BoA made out decently in that deal. It's getting about as much from Detroit as it can realistically afford to give. I mean, c'mon, these banks weren't stupid when they presented a financially desperate Detroit with an interest rate swap.

The reporting going on is horrendous.

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The bond insurers [[that's really who you're writing about, not really "banks") got hammered, as well they should have.

At the time, the swap fixed the interest rate to protect the city from interest rate risk. It's a gamble, but the swap counterparty [[B of A) normally plays both sides [[i.e. there is a buyer who is betting on floating rates). That person/company, who is not B of A, made out well.

The COPs are another matter altogether. The reduction in the amount due is essentially fee disgorgement, which is appropriate.

With permission, I'd like to use "$0.crap" in the future. Hilarious.

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Originally Posted by mwilbert

Your reaction makes me think you didn't understand what I wrote. Whether that is a problem with your reading or my writing or a combination I'm not sure. What do you see as the kicking?

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Apologies always, perhaps I didn't hear/see the message. My Detroit is so different from what gets published. I really do live in a vital community. Trash talk so pisses me off. Just sayin!

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Originally Posted by EastsideAl

What an asshole. If he doesn't think we're being punished enough he should come and live here and see for himself [[of course, having that asshole living here would be even more punishment for us).

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Nolan Finley is what the young kids call a TROLL.

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Originally Posted by mwilbert

This is a ridiculous argument. To whom are you trying to teach a lesson? The people who ran the city as it declined are gone. They aren't in charge of anything anymore. Most of them are dead. You can't punish them, or discourage them from future bad behavior. Kwame is already in jail. For that matter, most of the residents who voted for them are dead or gone too. Can't teach them anything either.

And even if you wanted to discourage the people living in the city from voting for people who do things you don't like in the future, how is that supposed to work? Those people can leave too. Or do you think it is somehow appropriate just to disadvantage the very old and very poor who cannot leave if you try to teach them the error of their ways? The whole idea is at the same time absurd and repulsive.

Because cities are made up of people who can avoid responsibility for financial mismanagement by leaving, you need to have rules about what cities can do, and oversight to make sure those rules are followed. Michigan did not do a good job of this previously. Hopefully it will do a better job in the future, and at least in the case of Detroit that should be the case.

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Best post on this thread.

This is exactly why federal bankruptcy laws are different for municipalities than for individuals and corporations.

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Originally Posted by hewettbr

To answer your first question : the region. Just because those in the past were to "blame" it doesn't mean that the current and future leaders wont go down the same path.

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This doesn't make any sense to me either. Do you really think there are leaders, or voters for that matter, in other municipalities in the area that look at Detroit and say to themselves, "We should be more like Detroit. Let's spend lots of money [[or cut lots of taxes), even if we destroy our town's finances; bankruptcy isn't so bad."? If nothing else, you seem to be neglecting all the bad stuff that happens before you get to bankruptcy--the part where you lay off lots of city employees, and cut services and get an EM. I don't think this is an attractive package at all, even with a relatively easy bankruptcy.

And, if it were, how much would making Detroit's bankruptcy less easy help?
Remember that the chickens don't come home to roost that quickly--if I were a mayor and wanted to be irresponsible chances are I could serve a couple of terms and retire before the consequences became evident. Voters do not pay attention to or understand things like assumed rates of return on pensions, or the terms of asset privatizations, and these can easily be manipulated to make the current books better and the future books horrible. The correct assumptions to make about these kinds of transactions aren't even agreed among professionals.

Here is a concrete example. How many people were really paying attention when Detroit made that horrendous debt swap related to the POCs? Note that the reason that the debt swap was horrendous wasn't primarily that the interest rate bet embedded in the swap turned out to be a bad bet, although it was in fact completely wrong, but because even if it had been correct Detroit was virtually certain to violate the associated covenants, resulting in large and needless penalties. How many people know what a debt swap is? How many people, knowing what a debt swap is, are going to look at the covenants and understand their implications? Do the News or the Free Press have writers who could even write such a story, assuming they were assigned to do so? How exactly are people supposed to evaluate whether their elected officials are behaving appropriately?

Both the theoretical problem and the theoretical cure are implausible.

Quote:

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Originally Posted by mwilbert

This doesn't make any sense to me either. Do you really think there are leaders, or voters for that matter, in other municipalities in the area that look at Detroit and say to themselves, "We should be more like Detroit. Let's spend lots of money [[or cut lots of taxes), even if we destroy our town's finances; bankruptcy isn't so bad."? If nothing else, you seem to be neglecting all the bad stuff that happens before you get to bankruptcy--the part where you lay off lots of city employees, and cut services and get an EM. I don't think this is an attractive package at all, even with a relatively easy bankruptcy.

And, if it were, how much would making Detroit's bankruptcy less easy help?
Remember that the chickens don't come home to roost that quickly--if I were a mayor and wanted to be irresponsible chances are I could serve a couple of terms and retire before the consequences became evident. Voters do not pay attention to or understand things like assumed rates of return on pensions, or the terms of asset privatizations, and these can easily be manipulated to make the current books better and the future books horrible. The correct assumptions to make about these kinds of transactions aren't even agreed among professionals.

Here is a concrete example. How many people were really paying attention when Detroit made that horrendous debt swap related to the POCs? Note that the reason that the debt swap was horrendous wasn't primarily that the interest rate bet embedded in the swap turned out to be a bad bet, although it was in fact completely wrong, but because even if it had been correct Detroit was virtually certain to violate the associated covenants, resulting in large and needless penalties. How many people know what a debt swap is? How many people, knowing what a debt swap is, are going to look at the covenants and understand their implications? Do the News or the Free Press have writers who could even write such a story, assuming they were assigned to do so? How exactly are people supposed to evaluate whether their elected officials are behaving appropriately?

Both the theoretical problem and the theoretical cure are implausible.

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Chickens in municipal finance do take a long time to roost.

While the chickens were so clearly assembling to roost on Detroit - the citizens and their elected officials worked to demonize Snyder for stepping in.

Perhaps they should have been spending an equal amount of time demanding that the State change the laws to prevent mayors and councils from plundering their treasures.

I don't accept the idea that because this problem requires years of malfeasance, we can excuse the citizens for electing fools. There is a deep structural problem that needs to be fixed, and no real discussion of how to reform municipal finances. The EM process is just a nice bandage that covers the real problem. The problem of spending future money to address today's needs. [[And in KK's case, he didnt' even address today's need -- but simply took the cash. But the problem is the same. Cities should not be allowed to do 'magic accounting' to push costs to our children. Our parents did that to us.

Finley is right. If this had really been painful, we'd be hearing talk about reform. All we hear now is how everything's gonna be OK if you trust me.

Quote:

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Originally Posted by Wesley Mouch

Chickens in municipal finance do take a long time to roost.

While the chickens were so clearly assembling to roost on Detroit - the citizens and their elected officials worked to demonize Snyder for stepping in.

Perhaps they should have been spending an equal amount of time demanding that the State change the laws to prevent mayors and councils from plundering their treasures.

I don't accept the idea that because this problem requires years of malfeasance, we can excuse the citizens for electing fools. There is a deep structural problem that needs to be fixed, and no real discussion of how to reform municipal finances. The EM process is just a nice bandage that covers the real problem. The problem of spending future money to address today's needs. [[And in KK's case, he didnt' even address today's need -- but simply took the cash. But the problem is the same. Cities should not be allowed to do 'magic accounting' to push costs to our children. Our parents did that to us.

Finley is right. If this had really been painful, we'd be hearing talk about reform. All we hear now is how everything's gonna be OK if you trust me.

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From whom would we be hearing talk of reform? The only entity that can reform this is the state of Michigan. And, as I wrote earlier, I think that they should; specifically that we need both clear rules about what is acceptable, and oversight to make sure the rules are followed. But if you think that having made the bankruptcy more painful for Detroit would have somehow facilitated that, I disagree with you.

If you want reform, the actual problem is that the bankruptcy was basically painless for Michigan. If the state had been held responsible for the debt [[implausible) or at least for making the pensioners whole [[somewhat plausible), I think you would have seen rapid action at the state level. As it is, I think too many legislators look at this as a Detroit-specific problem, which it really isn't.

Quote:

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Originally Posted by mwilbert

This doesn't make any sense to me either. Do you really think there are leaders, or voters for that matter, in other municipalities in the area that look at Detroit and say to themselves, "We should be more like Detroit. Let's spend lots of money [[or cut lots of taxes), even if we destroy our town's finances; bankruptcy isn't so bad."? If nothing else, you seem to be neglecting all the bad stuff that happens before you get to bankruptcy--the part where you lay off lots of city employees, and cut services and get an EM. I don't think this is an attractive package at all, even with a relatively easy bankruptcy.

And, if it were, how much would making Detroit's bankruptcy less easy help?
Remember that the chickens don't come home to roost that quickly--if I were a mayor and wanted to be irresponsible chances are I could serve a couple of terms and retire before the consequences became evident. Voters do not pay attention to or understand things like assumed rates of return on pensions, or the terms of asset privatizations, and these can easily be manipulated to make the current books better and the future books horrible. The correct assumptions to make about these kinds of transactions aren't even agreed among professionals.

Here is a concrete example. How many people were really paying attention when Detroit made that horrendous debt swap related to the POCs? Note that the reason that the debt swap was horrendous wasn't primarily that the interest rate bet embedded in the swap turned out to be a bad bet, although it was in fact completely wrong, but because even if it had been correct Detroit was virtually certain to violate the associated covenants, resulting in large and needless penalties. How many people know what a debt swap is? How many people, knowing what a debt swap is, are going to look at the covenants and understand their implications? Do the News or the Free Press have writers who could even write such a story, assuming they were assigned to do so? How exactly are people supposed to evaluate whether their elected officials are behaving appropriately?

Both the theoretical problem and the theoretical cure are implausible.

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you are totally off my original topic, all I did was give my opinion on the article and how i don't believe the OP was correct in his views. You are going into some whole other debate and I'm not even sure how we got there.

Quote:

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Originally Posted by Wesley Mouch

Finley is right. If this had really been painful, we'd be hearing talk about reform. All we hear now is how everything's gonna be OK if you trust me.

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I agree, just because he made this statement doesn't mean he wants to see the city and its residents suffer though.

Quote:

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Originally Posted by mwilbert

From whom would we be hearing talk of reform? The only entity that can reform this is the state of Michigan. And, as I wrote earlier, I think that they should; specifically that we need both clear rules about what is acceptable, and oversight to make sure the rules are followed. But if you think that having made the bankruptcy more painful for Detroit would have somehow facilitated that, I disagree with you.

If you want reform, the actual problem is that the bankruptcy was basically painless for Michigan. If the state had been held responsible for the debt [[implausible) or at least for making the pensioners whole [[somewhat plausible), I think you would have seen rapid action at the state level. As it is, I think too many legislators look at this as a Detroit-specific problem, which it really isn't.

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i don't think you're on the same page as everyone here. I don't know if there is a misunderstanding or if you are just conveying your message in a way i don't quite get.

The talk of reform would be by the residence, city council and state if the bankruptcy went badly and people were suffering. That is what happens when you are negatively reinforced, you learn not to make the same mistake.

I'm trying to figure out where there hasn't been "negative reinforcement". No streetlights, parks unmaintained and grown over, streets full of unfilled potholes, a broken water and sewerage system that needed to be partially given away in order to save it, limited snow removal, super slow police, fire, and EMS response, and calls to city agencies that go unanswered. To say nothing of the loss of our democratic rights, or of the people who worked and paid in good faith most of their adult lives who will now see cuts in their pension and health care, with many even having to pay back part of their retirement savings.

It all seems pretty damn negative to me.

With this talk of imposing yet more "negative reinforcement" on the citizenry an already heavily impoverished city, I have to wonder where the "negative reinforcement" is for our state. Lest we forget, a factor in tipping Detroit into bankruptcy was the state reneging on its revenue sharing for decreased taxation deal. Costing us hundreds of millions of dollars. And not letting the tax rate go back to where it was before, depriving us of many millions more.

To compound this, rather than just paying us the damn money they still owed, the state got to worm its way out of screwing us over by sending down the EM to "manage" us immediately into bankruptcy. Meaning that they got to essentially fold their own non-payment into the bankruptcy proceeding and wiggle free. Which is one reason why not everyone here feels like Lansing has our backs in all this. However, this is all just "water under the bridge" now I guess, and should be forgotten in the neat settlement of the bankruptcy.

Which it would be until assholes like Finley [[and apparently some posters here) poke their head up to tell us that we haven't suffered enough, or been "negatively reinforced" enough, to satisfy them. I guess if he was our massa [[rather than Mr. Orr) he'd make sure that ol' whipping post would be getting more use...

Quote:

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Originally Posted by Bankruptcy Guy

The bond insurers [[that's really who you're writing about, not really "banks") got hammered, as well they should have.

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Here's what the Free Press wrote about the swaps:

Orr said this morning that he had conversations with the SEC about filing actions against UBS and Bank of America Merrill Lynch, which collectively provided interest-rate swaps on a $1.4 billion pension debt deal originating in 2005.

He did not say how the SEC responded to his request. The Free Press reported in September that the deal might have been illegal.

Orr’s testimony came during a bankruptcy trial over whether the city can pay $165 million to the banks to get rid of the swaps.

The city reached a new settlement on Christmas Eve with the banks to get rid of the swaps with newly borrowed cash from London-based Barclays. The new deal amounted to a $65-million discount off a previous settlement of $230 million.

Today, Orr acknowledged "serious questions" about whether the city owes a dime on the deal, saying the city might have a "potential fraud claim" against the banks.

Why don't you send in your correction to them?

Quote:

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Originally Posted by EastsideAl

I'm trying to figure out where there hasn't been "negative reinforcement". No streetlights, parks unmaintained and grown over, streets full of unfilled potholes, a broken water and sewerage system that needed to be partially given away in order to save it, limited snow removal, super slow police, fire, and EMS response, and calls to city agencies that go unanswered. To say nothing of the loss of our democratic rights, or of the people who worked and paid in good faith most of their adult lives who will now see cuts in their pension and health care, with many even having to pay back part of their retirement savings.

It all seems pretty damn negative to me.

With this talk of imposing yet more "negative reinforcement" on the citizenry an already heavily impoverished city, I have to wonder where the "negative reinforcement" is for our state. Lest we forget, a factor in tipping Detroit into bankruptcy was the state reneging on its revenue sharing for decreased taxation deal. Costing us hundreds of millions of dollars. And not letting the tax rate go back to where it was before, depriving us of many millions more.

To compound this, rather than just paying us the damn money they still owed, the state got to worm its way out of screwing us over by sending down the EM to "manage" us immediately into bankruptcy. Meaning that they got to essentially fold their own non-payment into the bankruptcy proceeding and wiggle free. Which is one reason why not everyone here feels like Lansing has our backs in all this. However, this is all just "water under the bridge" now I guess, and should be forgotten in the neat settlement of the bankruptcy.

Which it would be until assholes like Finley [[and apparently some posters here) poke their head up to tell us that we haven't suffered enough, or been "negatively reinforced" enough, to satisfy them. I guess if he was our massa [[rather than Mr. Orr) he'd make sure that ol' whipping post would be getting more use...

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Negative reinforcement like pension cuts much more severe than they ended up being. The privatization of more services, the loss of more jobs, the further decline.

Bankruptcy has improved things, hence the no negative reinforcement comment. Can we not agree things could have been much worse? Yes things were bad but they are improving, trash gets picked up, roads are somewhat plowed, police have come when i have called, blight is being removed, streets are lit up...

whether all of that was directly due to the bankruptcy or not doesn't matter. People will associate it as such.

Quote:

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Originally Posted by EastsideAl

I'm trying to figure out where there hasn't been "negative reinforcement". No streetlights, parks unmaintained and grown over, streets full of unfilled potholes, a broken water and sewerage system that needed to be partially given away in order to save it, limited snow removal, super slow police, fire, and EMS response, and calls to city agencies that go unanswered. To say nothing of the loss of our democratic rights...

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What democratic rights were lost?

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Originally Posted by Wesley Mouch

What democratic rights were lost?

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First, remove your fingers from your ears. :rolleyes:

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Originally Posted by Jimaz

First, remove your fingers from your ears. :rolleyes:

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Do i have to?

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Originally Posted by Wesley Mouch

Do i have to?

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Well, there's not much point in attempting to comprehend — or influence — until you do remove your fingers from your ears. But do carry on regardless. Whatever. :rolleyes:

As democracy resumes in Detroit, people must vote

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During my last year in office, the democratic process was aborted when the governor appointed an emergency manager and took control of the city's operations and finances....

Now, 18 months later, some control of the city is being returned to the mayor and City Council, where it belongs. That is a good start to restoring democracy in Detroit....

We must return democracy to our city....

Government must work for everyone....

Democracy should preserve the rights of all citizens....

When politicians don't live up to their promises, we need to hold them accountable and remove those who have trampled on the democratic process.

Only then can we fully restore democracy to Detroit and all of Michigan.

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Snyder was elected by the people in a peaceful democratic manner
Michigan Republican Governor Rick Snyder has won re-election in 2014.

There are ""levels"" of democracy and city council
is on the bottom of the totem pole for a Michigan city.
The Governor would be at the top, so he calls the shots,
NOT the other way around, never ever.

It's bit like a STATE cop versus a County cop, versus a city cop, versus mall security

Quote:

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Originally Posted by Jimaz

the As democracy resumes in Detroit, people must vote

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Jster, thanks for posting. Perfect proof that Bing was a fool. Why does this man need to carry water for the Democratic party and repeat their talking points -- take 'cuts-only model' -- is he serious? The bankruptcy process was nothing at all like 'cuts-only'. In fact, cuts-only was more true while he was steering the ship. On the contrary, more good has been done by this bankruptcy steered by a Democrat [[Orr) than anything in the last 20 years. And very little good was being done by his job at the helm. He speaks the words of a fight for voters, but in fact helped condemn them to their sad fate, chasing away honest help for political gain. Makes me sick. I used to defend him on this forum. That article finishes him in my eyes. Nothing but pandering to the common denominator. No leadership. What office or job is he gunning for? We won't be seeing him in charge of the Bar Association.

Quote:

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Originally Posted by Wesley Mouch

Jster, thanks for posting....

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You're welcome.

How do you type with your fingers in your ears? :D

Quote:

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Originally Posted by Jimaz

You're welcome.

How do you type with your fingers in your ears? :D

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Amazing that I can keep my fingers in my ear to ignore the roar of stupidity around me, yet my computer types powered only by brilliant thought.

Bing was in way over his head as Mayor. He couldn't even run his business, his customers had to do a version of the EFM, bring in qualified managers and execs to run his business so they could get the parts out and not shut down the OEM's assembly line. No one listens to Bing. Nice guy, but a multilevel Peter Principle example.

Wow, a know-it-all malcontent doesn't agree with something. How shocking.

The Real News, published on November 13: The Post-Bankruptcy Plan for Detroit

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It is a blow to retirees and falls short of mitigating the circumstances that lead to the bankruptcy in the first place says Journalist, Curt Guyette and Reverend David Alexander Bullock

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