What's behind the rush to appoint Detroit's EM?

**Detroitnerd** · March-13-13, 07:37 PM

So what's the hurry?

If we were to wait just two more weeks, Detroit would have a full range of choices on what it wanted, consent agreement, emergency manager, neutral evaluation process or bankruptcy.

Instead, since the fix is in, the emergency financial manager must be appointed before the last week of march, thereby depriving Detroit of a choice.

http://metrotimes.com/news/news-hits...ffle-1.1457437

What a sneaky, sneaky way to ensure that Michigan's majority-minority cities get EM's forced on them, while any cities who come later have a choice!

**313WX** · March-13-13, 08:06 PM

Simple, because the state of Michigan doesn't want Detroit to vote itself into bankruptcy, because they know that will drag the entire state down with it.

**Det_ard** · March-13-13, 08:15 PM

In an email he sent our way after talking by phone, Wayne State’s Mogk points out that, “of the four options under Act 436, the state most likely sees three as impractical [for Detroit]. Bankruptcy is not desired, the consent agreement has been tried and failed, and mediation will take too long given all of the time that has passed already.”

We agree with Mogk that this seems to be the state’s perspective. But there’s also a certain absurdity to that perspective, especially in regard to the consent agreement. Detroit, after all, has been operating under just such an agreement since April 2012. It was signed by the city with a gun at its head. For the state to now be claiming that Detroit doesn’t have a credible plan to address its financial problems is to ignore the fact that for the last 11 months, the city has been operating under a plan forced on it by the state.

IF the city had been more effective in executing the plan they might not be getting an EFM/EM now. They would have had tangible results they could have pointed to that supported their view that they can solve their problem themselves. That clearly hasn't happened.

They dither, they demonstrate, they digress on tangential issues, they disregard solutions, they deny reality, they decry and they delay. So now, finally, they lose control of the city they've failed to manage and new management comes in to clean up their mess.

This Metro Times editorial carries no more weight than the rants in the Michigan Chronicle.

**brizee** · March-13-13, 08:23 PM

The coverage by the two big boys has been absolutely embarrassing.

http://www.deadlinedetroit.com/articles/4035/dd

There is dispute with some of these numbers. I'm not an accountant, but if 42 percent of the stated debt is taken care of, how can that just be handwaved away?

Dave Bing, also comes across as even more incompetent that I thought.

Or is it more devious?

Telling his constituents he doesn't want an EM while secretly meeting with Snyder's college buddy choice. I don't think the man is capable of shame.

**Detroitnerd** · March-13-13, 08:31 PM

Originally Posted by 313WX

Simple, because the state of Michigan doesn't want Detroit to vote itself into bankruptcy, because they know that will drag the entire state down with it.

And because other outcomes might not shield bondholders.

Anybody notice the proposed EM is cozy with Bank of America?

**313WX** · March-13-13, 08:37 PM

Originally Posted by Detroitnerd

And because other outcomes might not shield bondholders.

Anybody notice the proposed EM is cozy with Bank of America?

I'm not doubting that the EM can haggle with the pensioners.

That said, I don't recall that happening in any of the other communities that an EM has been put in place either.

**Detroitnerd** · March-13-13, 08:58 PM

It's my understanding that the EM law was specifically written with protections for bondholders, the people ostensibly being rewarded for their risks.

I remember hearing how Snyder met with bondholders a while back and told them not to worry, they would be repaid.

I'll just say it again: Unless everybody gets a haircut, it isn't fair.

**corktownyuppie** · March-13-13, 09:08 PM

Originally Posted by Detroitnerd

It's my understanding that the EM law was specifically written with protections for bondholders, the people ostensibly being rewarded for their risks.

The EM law was specifically written to expedite the bankruptcy process, saving money and time, both of which will reduce the haircut taken by all parties, including bondholders.

Bondholders will take a paycut. If I'm wrong in 18-months, I will buy you dinner at the Whitney.

I remember hearing how Snyder met with bondholders a while back and told them not to worry, they would be repaid.

While I don't doubt that this is possible, the claim is highly dubious. If you have a source on this, I'm open to hearing it.

I'll just say it again: Unless everybody gets a haircut, it isn't fair.

Good news. I think you'll get what you're asking for.

**corktownyuppie** · March-13-13, 09:10 PM

p.s. I know of at least one major brokerage firm that has had a SELL rating on Detroit and DWSD bonds for several years. If you have people who are getting assurances that bondholders will be made whole, they are a secret to the remainder of the investment community.

**313WX** · March-13-13, 09:13 PM

Originally Posted by corktownyuppie

The EM law was specifically written to expedite the bankruptcy process, saving money and time, both of which will reduce the haircut taken by all parties, including bondholders.

Bondholders will take a paycut. If I'm wrong in 18-months, I will buy you dinner at the Whitney.

While I don't doubt that this is possible, the claim is highly dubious. If you have a source on this, I'm open to hearing it.

Good news. I think you'll get what you're asking for.

No way will Detroit's financial problems be resolved in 18 months.

**Richard** · March-13-13, 09:13 PM

Easy pickings now when things are reported as desperate , maybe not so easy when you have a solid city government in place, in reality nobody is really watching the henhouse with all of the distractions , notice all of the big deals that are being pushed through before the change at the helm.

Why now?

**Richard** · March-13-13, 09:20 PM

Originally Posted by corktownyuppie

p.s. I know of at least one major brokerage firm that has had a SELL rating on Detroit and DWSD bonds for several years. If you have people who are getting assurances that bondholders will be made whole, they are a secret to the remainder of the investment community.

The last DWSD bond sale everything was sold in 24 hours ,I was watching to see who bought , but they are listed out of the city grubs and why they sell.
They make that part clear in the bond listing.

Interesting to see if that aspect keeps DWSD out of EFM reach on a technical quirk.

**mwilbert** · March-13-13, 09:27 PM

I think it is pretty clear that the state prefers to have an E[[F)M in Detroit to bankruptcy in Detroit, and presumably that is one reason for the current schedule. On the other hand, the city could have implemented the consent agreement, which, after all, they agreed to, and then the appointment of an E[[F)M would almost certainly have been delayed beyond the implementation date of the new EM legislation.

Sucks to be completely incompetent. I still think the city is likely to end up in bankruptcy anyway, but I guess we'll see.

**coracle** · March-14-13, 06:29 AM

If Detroit fails the State will have to support it [[pensions as well - but that's probably part of the Charles Pugh "PLAN"); so time is of the essence, and if the Council is allowed a choice between Consent Agreement, EM or Bankruptcy they will go for Consent Agreement every time because that allows them to continue to procrastinate and leave the mess to somebody else.

**DetroitPlanner** · March-14-13, 06:33 AM

This has not exactly been a rush. This has been coming since Granholm was Governor.

**Honky Tonk** · March-14-13, 06:34 AM

Rush? It's taken 50 years!

**downtownguy** · March-14-13, 02:36 PM

Originally Posted by brizee

The coverage by the two big boys has been absolutely embarrassing.

http://www.deadlinedetroit.com/articles/4035/dd

The article in Deadline Detroit is light years ahead of any reporting in the News or Freep. Crittendon makes some excellent points, and seems much more focused than Bing, which is probably why she is only two points behind him in the early mayoral polls. I'm not ready to throw my support behind her yet. I hope Deadline Detroit publishes interviews with the other candidates, too, because we can probably count on the News and Freep continuing to act as though the primary has already been held and Duggan and Napoleon are the only two candidates.