Detroit’s Deals with Financial Institutions Led to Disaster

December 24, 2013 | | EPI |

Today’s New York Times published one of the most important stories yet about the Detroit bankruptcy, a story that shines a harsh light on the financial institutions whose tricky deal-making helped tank the city’s finances. At the heart of the story is Detroit’s decision to enter into swap contracts that were spectacularly ill-advised. [...]

How did Detroit get taken down this road to disaster? In his report on the Detroit bankruptcy for Demos, Wallace Turbeville raises an important question about the ethics of the financial institution that negotiated the pension financing deal that did so much to precipitate Detroit’s bankruptcy. Turbeville wonders whether Detroit officials were taken advantage of because they didn’t understand what they were doing—or worse, that they did understand[.] [...]
I join Wallace Turbeville in hoping that appropriate agencies will look into this history.