‘Financial Stability Agreement’ forced on Detroit

April 4 was the 44th anniversary of the assassination of Dr. Martin Luther King Jr. in Memphis, Tenn. Dr. King was there to support a sanitation workers’ strike led by 1,300 African-American men seeking recognition through the American Federation of State, County and Municipal Employees union.

It is ironic that on that date this year, the governing bodies of Detroit capitulated to Gov. Rick Snyder and Wall Street by agreeing to a so-called “Financial Stability Agreement” or FSA, which cedes control over the City’s finances to a nine-member Financial Advisory Board. This was in lieu of the appointment by the governor of an Emergency Manager with similar authority under Public Act 4.

The purpose of Public Act 4 is to guarantee the banks’ continuing robbery of the City of Detroit. According to Snyder’s financial review team, this impoverished city paid $597 million in debt service to the banks in 2010 alone. The City’s long-term liability to the banks is $16.9 billion, including $4 billion in interest. In 2010, the City’s debt-to-net-assets ratio was an amazing 32.64 to 1.

Public Act 4 guarantees the banks “payment in full of the scheduled debt service requirements on all bonds, notes and municipal securities.” The same banks that destroyed the neighborhoods of Detroit with their predatory lending practices will be assured to get paid out of the City treasury, while services, jobs and City workers’ wages are slashed to the bone.

The Financial Advisory Board will essentially usurp the existing limited authority of the elected City Council and Mayor Dave Bing. While five members of the Council voted to accept this capitulation to the banks, four members rejected the agreement, saying it was illegal and solely designed to overturn the voting rights of residents and labor contracts of union members.

The rush to approve the FSA was to render moot the petition drive that collected 226,000 signatures aimed at nullifying Public Act 4. Had the signatures been certified, Public Act 4 would have been suspended pending a statewide referendum.

The FSA is a union-busting move. In an effort to avoid the imposition of an Emergency Manager, most of the major city unions had negotiated tentative agreements with Mayor Bing that imposed additional concessions on City workers. However, even these concessionary agreements were considered inadequate by Snyder and the banks. They have been tossed out by the FSA in a move meant to humiliate the union leadership.

The FSA is a racist move. All the Michigan cities with a majority of African Americans will now be under either an emergency manager or a financial board.

This essentially nullifies the Black vote throughout Michigan.

Struggle must take on the banks

Among the majority of people in the city, there is serious disappointment and outrage directed at the City Council, Mayor Bing, Gov. Snyder and the Michigan courts, which hastily threw out the numerous challenges preceding the vote. Hundreds of Detroit residents turned out and testified against the Emergency Manager or FSA at numerous City Council meetings and review team meetings prior to the vote.

The Moratorium NOW! Coalition to Stop Foreclosures, Evictions & Utility Shutoffs took the lead, pointing the finger directly at the banks as the source of Detroit’s financial crisis and demanding a halt to all debt service payments to these same financial institutions. Others have picked up on this theme, including Steve Babson, of the People Before Banks Coalition, and the Rev. David Bullock, leader of Operation Push.

A demonstration downtown at the Rosa Parks Transit Center the same night as the vote represented the first public response to the imposition of the FSA. The demonstration was organized by the Amalgamated Transit Union workers who drive the City buses. There have already been massive cutbacks in public transportation in Detroit. The FSA means there is bound to be even deeper reduction of services for the city’s largely working-class and poor population. This demonstration hopefully signals the beginning of a fightback mobilization by the unions in response to the attack.

City workers and community organizations are ready to move to another level of mass protests. The demand for a moratorium on the payment of debt service will cause even more consternation and fear on the part of the bankers. The struggle in Detroit portends much for the plight of cities throughout the U.S.

Jerry Goldberg contributed to this article.