Detroit Financial Controversy: Conflicts Of Bankruptcy Protection

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Detroit Financial Controversy
Conflicts of Bankruptcy Protection

LAS 301
Professor Ryder
September 26, 2013

The Detroit Financial Controversy:
Conflicts of Bankruptcy Protection The times have changed in Michigan; the days have long passed where Detroit was the place to be. Detroit has a strong history that has many people fighting to keep it alive. Detroit is known as the motor capital of the world as well as Motown but it is now fighting with the changing times and compromised guidance over the years. The Governor, Rick Snyder, has appointed an emergency financial manager, Kevyn Orr, to get Detroit back on track (Davey 2013). I believe the city needs the help to overcome the years of poor management, corruption, and overall neglect. The city has been under the emergency management system since March of 2013. In July the City of Detroit filed for bankruptcy protection, the residents and retirees are fighting back to save their pensions they have worked so hard for. I believe in The City of Detroit needing financial guidance but not at the cost of its residents.
Opposing Arguments The struggling city has citizens worried but in a poll given by the Detroit Free Press of 400 people, 46% say they are more concerned with crime, drugs, gangs, and violence (as cited in Baldas, 2013). The poll showed that 44% of those people feel the city is headed in the wrong direction and 50% feel that is was not necessary for Orr to file bankruptcy (as cited in Baldas, 2013). This is a small poll for a city with the population size of about 750,000 people but it does open my eyes on what view the residents have. The poll tells me that the city residents are fearful more of their life than if there is money in the checkbook; however, the residents and retirees had an open day in court on September 19, 2013. They were able to voice their concerns with the bankruptcy claims. U.S. bankruptcy judge Stephen Rhodes understands the public’s concern and went against common practice and allowed them to speak, there were 110 objections filed against the bankruptcy each person that showed up was given three minutes at the podium. As a retiree from the City of Detroit with over 33 years on the job, Olivia Gillon thought she could retire and enjoy her life that she had planned on. “My finances depend on my past employer’s promise of a lifetime pension after 30 years or more of service” said Gillon (as cited in Snavely, 2013). With the bankruptcy looming she was one that brought an objection against the city’s bankruptcy. The people of the city are objecting and are fearful the 23,500 retirees’ pensions could be drastically reduced or even lost in the approving of the bankruptcy. When Governor Snyder appointed Kevyn Orr as the emergency financial manager many in the city felt an injustice that they did not get to have a say in it. The whole process is causing continual tension and controversy leading up to the decision making process by Judge Rhodes.
Analysis
The City of Detroit’s financial independence has gradually declined. According to the mayor Dave Bing in the 2013 State of the City Address when he took office his administration inherited $332 million accumulated deficit, with an additional $13.8 billion in long-term liabilities; this causing Detroit to be the largest city to file for bankruptcy protection (Bing, 2013). Bing worked hard to lower the deficit and turn the city around but the income revenue is not there to support a turnaround. He did not give up on the city becoming successful but came to the realization that he would support the governor’s decision with appointing Kevyn Orr to take charge for at least 18 months. Orr has it on track to reach a negotiation deal with UBS AG and Bank of America first before the retirees in bankruptcy proceedings. Orr feels that his hands are tied by the $15 million in casino tax revenue that is controlled by these banks that kept Motor City out of
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