“This Is War!” was the battle cry headline on a leaflet issued by the Moratorium Now! Coalition to Stop Foreclosures, Evictions & Utility Shutoffs calling for a noon demonstration at the Coleman A. Young Municipal Center — city hall — on July 26. “The national outrage over the acquittal of George Zimmerman for killing African-American youth Trayvon Martin is still roiling,” began the call, “when yet another racist injustice on a national scale has occurred: the undemocratic action of an appointed ‘emergency manager’ plunging Detroit into the largest city bankruptcy in U.S. history.”
Orchestrated in advance by Michigan’s Republican governor, Rick Snyder, and filed July 18 in federal bankruptcy court by his appointed henchman, Emergency Manager Kevyn Orr, the bankruptcy seeks to obliterate retired workers’ pensions in order to pay principal and debt service to banks and other creditors. (See “Detroit bankruptcy: War on Pensions” at workers.org, July 24.)
But residents, workers, youth and retired employees of the city of Detroit are beginning to fight back against this declaration of war against the people on behalf of the banks. Some 150 people came to the lunchtime picket line. Chanting, “Hands off our pensions! Make the banks pay!” and other demands, city retirees, young people and community members participated in the militant action. Many retired workers came because they had received a leaflet issued by the “Stop Theft of Our Pensions Committee” of the Moratorium Now! Coalition.
The protest received extensive media coverage throughout the day. Earlier in the week, the coalition’s banner, “Cancel Detroit’s Debt: Jobs, Pensions, City Services — The Banks Owe Us!” was seen in media around the U.S. and internationally as activists gathered outside the bankruptcy court in downtown Detroit.
On July 22, at the request of Orr and Snyder, federal bankruptcy Judge Steven Rhodes put a halt to all lawsuits challenging Detroit’s bankruptcy filing. He said the bankruptcy court would have exclusive jurisdiction over all issues pertaining to the city.
Rhodes removed the order of Michigan Circuit Judge Rosemarie Aquilina, who had ruled earlier that the bankruptcy filing was unconstitutional insofar as it targeted city workers’ pensions, which are guaranteed under the state constitution, and stayed bankruptcy proceedings on that basis. Rhodes, however, did not issue a ruling on the constitutional issue itself.
The day after the demonstration, Republican state Attorney General Bill Schuette announced that he would intervene in the bankruptcy case and join those advocating that public pensions in Michigan are not subject to being cut in bankruptcy. While Schuette is no friend of workers and cannot be trusted to aggressively fight for this position, the fact that he took a position at odds with Snyder and Orr reflects the power of the mobilization thus far and the need for continued demonstrations.
The banks’ ‘unclean hands’
Workers World spoke to Moratorium Now! organizer Jerry Goldberg, who is also a people’s attorney representing homeowners against banks in foreclosure cases. “In bankruptcy, bank debts are subject to equitable considerations, meaning what’s fair and just,” said Goldberg. “If the banks are guilty of what’s called unclean hands, then their debts are subject to liquidation. For example, in the recent Jefferson County Alabama case, because JPMorgan Chase was found guilty of bribing officials in connection with municipal bonds, they were forced to write off 70 percent of the debt to the county.
“Two of the biggest Detroit bondholders are UBS and Bank of America,” continued Goldberg. “They are the primary beneficiaries of Detroit’s interest rate swaps on the city’s pension obligation certificates, which netted them hundreds of millions in profits on inflated interest payments.”
On July 24, two former UBS vice presidents, Gary Heinz and Michael Welty, as well as Peter Ghavami, former UBS global head of commodities, were sentenced to prison terms for deceiving cities and towns by rigging bids to invest municipal bond proceeds. (Reuters, July 24)
A July 12 New York Times article reported: “Phillip D. Murphy, former head of Bank of America’s municipal derivatives desk, was charged with conspiracy to defraud the United States, wire fraud and conspiracy to make false entries in bank records.” The article noted that “13 individuals from banks including Bank of America, JPMorgan Chase and UBS have pleaded guilty in the Justice Department’s investigation. Bank of America, JPMorgan, UBS, Wells Fargo and General Electric have paid more than $700 million in restitution and penalties.”
When asked about these reported criminal activities by the biggest banks, Goldberg said: “These are in addition to every major bank’s predatory, fraudulent, subprime mortgage lending practices, which resulted in over 100,000 mortgage foreclosures in Detroit from 2005 to the present, and which is the primary cause for the city’s financial crisis.
“Emergency Manager Orr was mandated under Public Act 436 to investigate criminal fraud that contributed to Detroit’s financial crisis. But he has refused to go after the banks. No surprise considering his law firm, Jones Day, represents most of the major banks, and is making a killing in attorney fees off Detroit’s bankruptcy, charging $1.3 million in fees already with the bankruptcy just beginning.”
The Moratorium Now! Coalition says that because of the criminal fraud the banks have perpetrated on the people of Detroit and the city itself, Detroit should cancel its debt to the banks. The banks owe Detroit billions of dollars for the destruction they have caused. While the coalition intends to challenge the banks’ unclean hands in the bankruptcy proceedings, activists say this issue, like the looting of retired workers’ pensions, will ultimately be decided in the streets.
For more information, contact the Moratorium Now! Coalition at 313-680-5508 and visit its websites at Moratorium-Mi.org and Detroitdebtmoratorium.org. The coalition meets every Monday at 7 p.m. at 5920 Second Ave., Detroit, MI 48202. The Stop Theft of Our Pensions Committee meets at 6 p.m. at the same location.