Since March 25, the city of Detroit has been run by an unelected, 1%-beholden supreme dictator. On that day the elected mayor and city council, all African Americans, became a paper administration with no decision-making power. The only concession the new governor-appointed Emergency Manager Kevyn Orr made to city officials was to allow them to continue collecting their salaries, for the time being.
Before accepting the job as Emergency Manager — which pays $275,000, almost three times what a City Council member makes — Orr was a partner with the high-profile corporate law firm, Jones Day. His specialty is bankruptcy and restructuring. His new job is to make all the brutal cuts — service reductions, worker layoffs, union concessions and the selling off of public assets — that he deems necessary to put the city on a sound financial footing. The catch is that under the state Emergency Manager law the EM is obligated to pay debt service to the banks.
Last November, the voters shot down Public Act 4, dubbed “the dictator law,” at the polls. PA 4 allowed the governor to appoint an EM with the power to make a wide range of decisions over a city or school district without consent of elected officials. A month later, the same outgoing legislature that passed “right-to-work” legislation also passed a new, only slightly modified EM law — PA 436. Gov.Rick Snyder signed the bill.
The governor wasted no time in finding the right person to restructure Detroit. Orr was recommended by Jones Day, the firm that represented the banks in negotiating what amount to predatory loans with the city. Orr calls his new responsibilities “the Olympics of restructuring.” (Detroit News, March 15)
First Chrysler, now Detroit
Prior to this appointment, Orr’s biggest claim to fame might be called the World Series of restructuring: the 2009 Chrysler bankruptcy. Orr served on the team of Jones Day lawyers representing Chrysler. The supposedly cash-poor company paid the law firm $35 million, with Orr earning about $750 an hour.
The bankruptcy process was used, as is often the case, to force huge concessions on union members. Long-established union standards were destroyed, including the cost-of-living allowance and time-and-a-half after eight hours and on weekends. Some paid holidays were eliminated, break times were shortened and six plants were closed. This writer’s former plant in Ohio is now a pile of rubble.
During the Chrysler bankruptcy, Kevyn Orr, an African-American attorney, did not get much media attention. Then the focus was on Corinne Ball, Chrysler’s lead attorney from Jones Day. Now that Orr is playing for finance capital in “the Olympics,” his particular role in the Chrysler restructuring has come to light. He represented the company in the closing of almost 800 dealerships. With less than a month’s notice 40,000 salespeople and mechanics — members of the United Auto Workers, Teamsters and Machinists unions — learned that their livelihoods had been eliminated. Nearly 800 family businesses were destroyed.
Prior to that, Orr represented Kaiser Aluminum in bankruptcy court. Kaiser’s losses had accumulated after an illegal lockout of Steelworkers union members and hundreds of millions in liabilities tied to products containing asbestos.
Austerity plan without declaring bankruptcy?
“Don’t make me go into bankruptcy court,” Orr warned the city on March 15. “You won’t enjoy it.” (Crain’s Detroit)
Whether finance capital can complete its austerity plan for Detroit without the city having to declare bankruptcy remains to be seen. With PA 436 in place, the EM can unilaterally break up union contracts and change terms and conditions without the union’s consent. Pay, benefits, pensions and job security are all at risk. Any savings for the city will be wasted down the rat hole of debt service to the banks.
Despite the City Council charging a conflict of interest, Jones Day, the EM’s former law firm, still has the contract with the city to negotiate loan terms!
The appointment of Orr as EM for Detroit is just the latest attack on a once-thriving majority African-American city. By foreclosing on tens of thousands of families and undermining the city’s financial well-being with massive debt, the banks have already destroyed Detroit.
The bankers’ conduct has not gone unchallenged. The Moratorium Now! Coalition to Stop Foreclosures, Evictions and Utility Shutoffs filed a Freedom of Information Act lawsuit and won access to documents related to city bonds. The scandalous role of the banks will be publicly exposed at a May 4th People’s Assembly, 1:00 p.m., Central United Methodist Church, 23 E. Adams, Detroit.
Grevatt has been a UAW Chrysler worker for 25 years, first in Ohio and now in Detroit.