Judge Rules Detroit Is Trying To Give Banks ‘Too Much Money’
A judge rejected Detroit’s second attempt to resolve one key piece of its unpayable debts on Thursday, saying that a renegotiated deal with two Wall Street banks was still “just too much money.” [...]
While the $300 million debt involved in Thursday’s decision is a tiny fraction of the city’s overall debt burden, the specifics of the debts involved here make this deal central to emergency manager Kevyn Orr’s plans for bringing Detroit out of bankruptcy.[...]
The disparity between how Orr wishes to treat banks and retirees is even more jarring considering that banks bear much more of the blame for the city’s financial troubles than retirees. Detroit pensions are modest compared to similar cities’ public worker contracts, and experts have accused Orr of using “pension voodoo” to exaggerate the funding gap in the pensions by a factor of five. But the bad financial deals Wall Street sold to the city soaked up so much of its operating revenue that bankruptcy was the only recourse, according to financial expert Wallace Turbeville.
Read Turbeville's report: The Detroit Bankruptcy
Sign up for our emails to stay updated on what we're doing and how you can help.