Posted: 3/18/2013 8:06:16 PM
It’s another example of privatizing the profit and putting all of the risk on American tax payers.
Sadly, it doesn’t stop there. Banks receive special dispensation and protection under the new version of the Emergency Manager law passed by Michigan Republicans and signed into law by Governor Rick Snyder, Public Act 436. The new law replaces one sent to the rubbish bin by Michigan voters last November and goes into effect later this month. One aspect of the law that hasn’t gotten much attention is Section 11(1)(b):
Sec. 11. (1) An emergency manager shall develop and may amend a written financial and operating plan for the local government. The plan shall have the objectives of assuring that the local government is able to provide or cause to be provided governmental services essential to the public health, safety, and welfare and assuring the fiscal accountability of the local government. The financial and operating plan shall provide for all of the following:
(a) Conducting all aspects of the operations of the local government within the resources available according to the emergency manager’s revenue estimate.
(b) The payment in full of the scheduled debt service requirements on all bonds, notes, and municipal securities of the local government, contract obligations in anticipation of which bonds, notes, and municipal securities are issued, and all other uncontested legal obligations.
So, not only have the big banks reaped hundreds of millions of dollars in fees and avoided taxes by walking away from foreclosed properties, they are first in line to get paid when Detroit’s debt problem is resolved. To add insult to financial injury, the banks will be paid “in full”, not risking anything if the city goes into bankruptcy. This is in contrast to other creditors who may get paid only pennies on the dollar if Detroit eventually does go through Chapter 9 municipal bankruptcy, something newly-minted Emergency Financial Manager Kevyn Orr says may be a possibility.
This one sentence buried on page 10 of the 22-page law is a big wet kiss to the banks that have already profited handsomely as Detroit circles the drain. And it’s going almost completely unnoticed.