Category: Jones Day (page 1 of 5)

Power & Struggle: The Detroit Literacy Case

Power & Struggle: the Detroit Literacy Case

By Frank X. Murphy

September 26, 2016

“Some conflicts do not yield to compromise and can be resolved only through struggle.”

– Gene Sharp,Power and Struggle

The strangely twisted presidential election campaign of 2016 coincides, in Detroit, with the gradually spreading realization that this utterly broken system will continue to fail at delivering broadly shared, equitable “recovery”. The historic emergency-managed bankruptcy in 2013-14, courtesy of the giant Jones Day law firm – who charged taxpayers $70 million for the privilege of looting our city – is officially over. But its profound after-effects on policy, quality of life and the limits of imagination linger on.

The “resurrection” narrative promoted by the emergency manager fascist (EMF) bankrupters wears ever thinner. In the face of an existential crisis of public education, mass water shut offs, mass home foreclosures, financial opportunism displacing democracy, and other effects of structural racist adjustment[1], reality is starting to sink in. Leading apologists for the EMFs’ accumulation-by-dispossession agenda, who sit on formal neutered local government bodies like the city council, have begun to allude in public to the suggestion that these arrangements are driving poor African American People out of the city – a cartoon version of the downtown development economic bubble that’s systematically extracting the value of “Detroit” from the surrounding neighborhoods – as a “conspiracy” theory. Think of it as “Resurrection” city vs. “Conspiracy” city. No place for the real Detroit in it at all.

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A Strait Fable

By Frank X. Murphy

April 13, 2016

In spring 2016 the town of Thugginville was in a kerfluffle.  The bad Governor’s Racist Political Assault (RPA) caused unhappiness.  Lawlessly Severing Democracy (LSD) lifted up a Zombie Election Results Ogre (ZERO). Schools turned into corrals for thinking.  Water was poisoned in a neighboring village to the north, and shut off for Thugginville’s People who lost their jobs and pensions.  Housing was taken from the poor to give to the rich.  Greater Downtown Thugginville got billions of dollars in investments, while surrounding neighborhoods where the People live were shut out and shut off – from education, water and housing.

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Watch: Audience Calls ‘Baloney’ on Snyder at WSU Bankruptcy Talk

Watch: Audience calls ‘baloney’ on Snyder at WSU bankruptcy talk

By Sarah Rahal

December 10, 2015

“On Wednesday evening, WDET hosted Detroit Bankruptcy: One Year Later, a talk featuring Gov. Rick Snyder, Mayor Mike Duggan, and retired bankruptcy Judge Steven Rhodes at Wayne State University. The panel was set to answer questions from journalists from the Detroit Journalism Cooperative; however, a fiery-tempered audience cut the event short. One audience member called out Snyder’s “baloney.” Protestors interrupted Judge Rhodes, who walked offstage, and Duggan did not make an appearance.”

Thinking for Ourselves: Bedtime Stories

By Shea Howell

November 7, 2015

It has been one-year since Detroit exited bankruptcy. The corporate elite are celebrating their success. On November 19 the Michigan Bar Association will gather at the Detroit Institute of Arts to give the 11th Annual Dennis Archer Public Service Award to bankruptcy judges Gerald Rosen and Steven Rhodes. Without a hint of irony or shame, lawyers are invited to stroll through the DIA to enjoy gourmet food and an open bar. They are promised that the money raised by the event will support “justice initiatives” for foster children. Guests are assured they can “get home in time to read our own children a bedtime story.”

Perhaps it will be a bedtime story about how a city celebrating African American political power and ingenuity was stolen by white corporate elites through legal fictions. Probably not. The bedtime story the corporate elite like to tell is that they charged into the city to save it from itself. In the process they saved the art of the DIA, got rid of overblown pensions, jolted people out of a culture of not paying their way, and got rid of crooked politicians.

Both Emergency Manger Kevyn Orr and his follow up Mayor Mike Duggan agree that the bankruptcy is a success. “I think the early indicators exceeded our expectations,” Orr said in an interview last month. Duggan weighted in with the Detroit News saying that there are signs of a substantial recovery. Buses meet schedules, police and ambulance response times are improving, and more than 7,000 homes have been torn down. New housing set for the riverfront and the Red Wings arena district all lead to the Mayor to say, “We’ve got jobs coming back, and we’re feeling good.”

These storytellers acknowledge dark clouds on the horizon. Mostly they don’t think they have done enough to get rid of pensions. In a recent article assessing bankruptcy, the News pinpoints the “balloon pension payment” coming in 2024 as a major problem. For most of Detroit, this bedtime story is pure fiction. It begins with the false claim that there was no alternative for the city but bankruptcy. It is a fiction that evades the real costs of this legalized theft from elders whose pensions were decimated. As was widely reported, but generally ignored by the corporate elite, of the $7 billion eliminated from the debt, “ nearly 80 percent is being taken from retirees.”

Now we have street lights to illuminate the 100,000 people shut off from water, the foreclosures of more than 62,000 homes, and the use of money that was supposed to help people stay in their homes and repair them being used instead to tear them down.

This reality cannot continue to be ignored. Bankruptcy has achieved nothing but the legal framework to strip pensions, hurt unions, and drive out the most vulnerable. It is resulting in a whiter, wealthier city at the expense of the poor and people of color.

Since the very beginning of this story, Detroiters have argued there is a better way. We have argued that it is possible to have fair, just, and shared development. It is no bedtime tale. It is pragmatic policies. We need legislation to collect suburban income tax and to allow rent control. We need our fair share of our revenue sharing. We need community benefits legislation, the elimination of corporate tax breaks, and a moratorium on water shut offs and foreclosures. We need an income based water affordability plan.

Unless we face reality, the stories we tell to our children will be of collective failure to meet the critical challenge of redeveloping a city for all of our people.

An Open Letter to Other White People Who Say They Love Detroit

Open Letter

By Tom Stephens

Jones Day edition, October 13, 2015

ITEM:

On September 26 I saw a little hanging sign at an eastern market tchotchke popup that says “Carpé Detroit”; Seize Detroit – WTF?

ITEM:

On October 12 what’s still celebrated in some places as “Columbus Day” – wasn’t celebrated much in Detroit, where Cristoforo (“Christ-Bearer”) C is mostly & accurately remembered as a slaver and bringer of genocide;[i]

ITEM:

On October 13 at DIA (Detroit Institute of Art) the Jones Day law firm will celebrate its criminal enterprise, in what Detroit-raised poet Marge Piercy has called the sacking of Detroit by the rich; and

ITEM:

On November 19 the Detroit legal community will honor Chief Judge Gerald Rosen and retired Detroit bankruptcy Judge Steven Rhodes for their supervisory roles in the aforesaid sacking of Detroit by said rich.

There’s a ‘rich’ and growing literature related to the general topic of racism and white newcomers in Detroit. (links @ the end)  My adding this short point to that critical discussion is connecting things.

Connecting opportunities enjoyed by all the forces under the “Detroit Future City” (DFC) policy initiatives; Detroit’s creative, foundation-funded and nonprofit-organized white youth; revitalization contractors; down- and mid-town vibrancy hub movers and shakers.

I want to try and connect all that to Detroit’s 2013-15 experiences with emergency management, bankruptcy and restructuring in the new Jones Day.  “Seize” Detroit indeed, under judicial control but without clear precedents, limits to unilateral decisions or accountability to the residents of the community.  Are these issues we should be thinking and acting on?

As has repeatedly been stated, Detroit is about 139 square miles, a big piece of real estate;

Connection Downtown-  it’s recognized and even celebrated (e.g., at the DIA this October & November) that billions of dollars of investment are concentrated in only about 7.2 square miles downtown and up M-1 (the Cass Corridor) to the New Center.

Connection Neighborhoods-  moreover, the exploding economic inequality between folks like the tax break-opportunized Ilitch billionaire 1%, and the half million or more overwhelmingly African-American residents suffering around the official poverty level in the other 130 plus square miles of exploited residential neighborhoods.

Connection Austerity Policies-  the majority of the city’s People in neighborhoods that are even now being swept by yet another foreclosure plague.

Connection Cultural and Biological Genocide – Detroit Public Education utterly destroyed under state EMF emergency management, and Flint’s People forced to drink contaminated water also by said EMFs.

Are the connections still unclear to anybody who’s paying attention and in town for more than 6 months?

The predictable – and predicted – results of EMF-management and Jones Day-controlled bankruptcy in Detroit are (hopefully temporary) loss of political agency, self-government, accountability and critical social capital in the City.

These results are racial.  While acknowledging this reality may be uncomfortable for beneficiaries of unearned privilege, it is important.

These results are ultimately inseparable from the basic idea and thrust of “development” as envisioned & shaped by Detroit philanthropic and nonprofit leaders, largely under the “DFC” continuous rebranding exercise that determines capital flows.  Celebrated at DIA twice this fall.

Get it?

Some things you should do if you can:

  1. Support the People of Detroit
  1. Question, critique and protest the seizing of Detroit by white supremacists for corporate power & profit – Picket DIA on the evenings of October 13 and November 19
  1. Advocate accountable and democratically elected local government to represent the interests of the People of Detroit – Stop Foreclosures and keep People in their homes!
  1. Stop Water Shut Offs! Support the Water Affordability Plan
  1. Support Community Benefits Agreements
  1. Support other policies that bring equity, social justice and racial healing to the revitalization of Detroit

HOPE TO SEE YOU IN THE STREETS!

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THEY PULLED IT OFF! by Curt Guyette

 http://michigancitizen.com/detroit-bankruptcy-debt-and-democracy/

The grins stretched from ear to ear, and the hugs and back-patting were plentiful.

Gov. Snyder and Mikde Duggan

Gov. Rick Snyder and Mayor Mike Duggan celebrated Bankruptcy Judge Steven Rhodes’ acceptance of their Plan of Adjustment that cuts workers’ and retirees’ pensions and healthcare, and takes back earlier annuity payments from the city over the last decade. CURT GUYETTE PHOTO

Emergency Manager Kevyn Orr, Gov. Rick Snyder, Mayor Mike Duggan and U.S. Judge Gerald Rosen — all were in a celebratory mode last week as they appeared at a press conference following the announcement by U.S. Bankruptcy Court Judge Steven Rhodes that Detroit’s proposed “plan of adjustment” had been accepted, putting an end to the city’s journey through bankruptcy.

Newspaper headlines announced the city had been “reborn,” and the final words of the ruling read from the bench by Judge Rhodes echoed triumphantly: “It is now time to restore democracy to the people of the city of Detroit. I urge you to participate in it. And I hope that you will soon realize its full potential.”

The irony, of course, is that it was the hijacking of democracy that brought Detroit to this place.

It began in early 2012, when lawyers from the Jones Day law firm, in conjunction with the investment banking firm Miller Buckfire, began secretly meeting with Gov. Snyder’s office and other state officials to figure out how to thwart the will of Michigan voters.

The concern was that a grassroots-effort to repeal a new state law giving unprecedented powers to appointed emergency managers would succeed. And so they devised their response, and were ready to act when voters went to the polls in November 2012 and rejected the law by a significant margin.

Within a month, the state’s Republican-led Legislature crafted a new law containing many of the same provisions as the one Michigan’s citizens — engaging in the democratic process hailed by Judge Rhodes — had just voted to repeal. Only this time, an appropriation would be attached to the statute, making it “referendum proof.”

So much for a commitment to the democratic process.

As a result, instead of having elected officials deciding Detroit’s fate, Emergency Manager Kevyn Orr and his former partners at Jones Day began calling the shots, as the city was shoved into bankruptcy.

From the outset, the primary target of debt-cutting was clear: The city’s retirees would be the ones facing the most severe sacrifices.

Again, Jones Day, which had some of the city’s biggest creditors as its clients, would play a key role. The firm’s lawyers laid the legal groundwork for using bankruptcy to go after retiree benefits in bankruptcy — even in a state like Michigan, which has the protection of pensions written into its constitution.

Casual observers of this drama will have heard that, as a result of the much-hailed “grand bargain” — an $816 million cash infusion from the state, private foundations and the Detroit Institute of Arts — the cut to general retiree pensions would be just 4.5 percent, and that police and firefighter retirees won’t get nicked at all.

Kevyn Orr

Kevyn Orr is all smiles at the press conference announcing Judge Rhodes’ acceptance of his Plan of Adjustment. CURT GUYETTE PHOTO

What tends to get lost in the reporting is the true extent of the hit being taken by retirees.

Both civilian and uniformed retirees will absorb massive losses thanks to deep cuts in future cost of living increases. For the general retirees, those yearly raises are being eliminated completely. Taken together, the two groups will give up a total of more than $1.3 billion in the coming years.

Cuts to healthcare benefits only compound the problem. Instead of being on a plan where the city covers 80 percent of healthcare costs, retirees are receiving a monthly stipend. For most, the amount is $125, leaving them to pick up the additional costs of insurance, which can be hundreds of dollars a month.

And then there’s the “clawback” of excessive interest rates the Jones Day attorneys argued was paid to people who participated in an annuity savings program between 2003 and 2013.

As one retiree observed, “I’m getting hit four different ways.”

Add it all up, and at least 75 percent of the estimated $7.3 billion in debt and obligations being shed in bankruptcy comes in the form of cuts to retirees.

Will that be enough to put the city on a sound financial footing?

Despite the media’s focus on Detroit’s supposed rebirth, there is real cause for concern that the fundamental factors that led to the city’s dire straits remain unaddressed. In a recent opinion piece, economist Peter Hammer — who’s also a law professor and director of the Damon J. Keith Center for Civil Rights at Wayne State University — warned:

“The perverse logic of fiscal austerity is creating dozens of second-class ‘minimal cities.’ The move to transition Detroit away from serving as a city, to a slimmed-down version with little to no municipal services, is part of the bankruptcy Plan of Adjustment that the city is pursuing, on a par with what the World Bank and International Monetary Fund pursued with Structural Adjustment Programs in much of the developing world. What we know from these SAPs is that they sucked the life out of countries forced to receive them.

“The same will happen with Detroit, especially given how out-of-touch managers are with the city’s history and context. The 226-page Expert Report, for example, on the feasibility of the POA and the reasonableness of the city’s revenue forecasts never addresses issues of race, racism, regionalism, segregation or foreclosure (all words that appear nowhere in the report). And poverty is only mentioned once. … We need alternatives to the dictates of fiscal austerity and structural racism.”

As for Judge Rhodes, this is what he told the people of Detroit:

“A large number of you told me that you were angry that your city was taken away from you and put into bankruptcy. You told me in your court papers. You told me in your statements in court. You told me in your blogs, letters and protests. I heard you.

“I urge you now not to forget your anger. Your enduring and collective memory of what happened here, and your memory of your anger about it, will be exactly what will prevent this from ever happening again. It must never happen again.”

Then he urged Detroiters to channel that anger into positive action by engaging in the democratic process.

For the next 13 years, however, the people of Detroit will have elected leaders, but it won’t really be a true democracy. That’s because an appointed, nine-member financial advisory board (containing only two Detroit officials) will have the final say over approval of major contracts and the budget process.

“It is your City,” Judge Rhodes told Detroiters.

But it is others who, though unelected and mostly living elsewhere, will be the ones with the final authority over crucial decisions facing Detroit for the foreseeable future.

 

Curt Guyette is an investigative reporter for the ACLU of Michigan. His work, which focuses on Michigan’s emergency management law and open government, is funded by a grant from the Ford Foundation. You can find his reporting at aclumich.org/democracywatch. Contact him at 313.578.6834 or cguyette@aclumich.org.

Detroit; Rise Up Against the Plan of Adjustment!

by Tom Stephens

People have the expectation, and the human right, to receive justice in courts.

The “Plan of Adjustment” confirmed by the Detroit bankruptcy court on Friday, November 7, 2014, is not justice.

The white supremacist truth about these Chapter 9 municipal bankruptcy proceedings has been systematically covered up by local corporate media.

Operating under what University of Texas journalism professor Robert Jensen describes as their “ideology problem”[i] such corporate press agents 1) rely on “official sources”, no matter how demonstrably self-interested and biased; and 2) assume that the so-called “solutions” of corporate capitalist leaders are legitimate. Meanwhile, larger majorities of People are realizing every day that those same corporate powers are in fact the problem.

In Detroit, corporate media ideology has been especially extreme. Wayne State University journalism Professor Jack Lessenberry recently called out the endorsement of Governor Snyder’s re-election by Gannett Corporation – operating under the guise of the Detroit Free Press.[ii] Denouncing Snyder’s regressive environmental policies, “Michissippi” values, and hokey “tough nerd” persona, Gannett ideologues nevertheless endorsed his re-election. This may be a new low in “There Is No Alternative” lies around Detroit’s morally bankrupt, emergency-managed restructuring.

In recent weeks, the hypocrisy, racism and genocidal direction of this pattern of abuse peaked in the theater of cruelty surrounding Rhodes’ confirmation of the Plan of Adjustment. In the lead up to that absurd non-event, alternative voices have been making themselves heard for months with increasing frequency, to the point where the Detroiters Resisting Emergency Management web site[iii] is three and a half pages deep in recent, relevant critiques and eloquent calls for justice.

Professor Peter Hammer and Michael Shank, writing in The Hill, captured the essence of Detroit’s near-term future: “Next year heralds the frightening but inevitable endgame of fiscal austerity that will forever change the character of this city. Stripped to the bones, Detroit will be a shell of its former self, offering minimal services of police and fire protection and that’s about it. A city no longer, Detroit will be a convention and sports space with no municipal services to sustain it.”[iv] Think of it as “Jones Day, the Play”.

Rhodes concluded his performance as Detroit’s bargain basement auctioneer by urging Detroiters to “forget” and “move past” our anger, and to embrace a “much grander bargain” he has the gall to call “democracy”. This is the noxious authoritarian doctrine of ‘the ends justify the means’, trotted out by a faux-enlightened philosopher jurist with no real heart to respond to the suffering of Detroiters who are being disenfranchised, displaced, cut off from water and deprived of dignity, agency and humanity by the vicious Jones Day/Snyder/bankruptcy austerity regime. No whiff of critical assessment troubled corporate media drowning in bombastic self-congratulation.[v]

The “Plan of Adjustment” confirmed by the Detroit bankruptcy court is not justice. It is discrimination; opportunism; expediency; cruelty; austerity; dishonesty; corruption; lawlessness; power and greed. And Detroit’s corporate media helped make it all possible by refusing to publish the truth.

—–

[i] Professor Robert Jensen: http://dissidentvoice.org/2014/01/the-ideology-problem/

[ii] Professor Jack Lessenberry: http://www.metrotimes.com/detroit/politics-and-prejudices-our-broken-system/Content?oid=2264698

[iii] Detroiters Resisting Emergency Management: http://www.d-rem.org/

[iv] Professor Peter Hammer and Dr. Michael Shank: http://thehill.com/blogs/congress-blog/economy-budget/222119-detroit-on-the-brink

[v] “There is also no way to overstate the brilliance of Governor Snyder and Kevyn Orr throughout the bankruptcy process.” – Detroit Regional Chamber President and CEO Sandy K. Baruah
http://www.detroitchamber.com/detroit-on-cusp-of-new-era-with-bankruptcy-announcement/
(released 15 minutes after Rhodes approved the Plan of Adjustment)

Carve Ups and Carve Outs: the Carving of Detroit

Carve ups: 

… on [Dan Gilbert’s] annual pilgrimage to a pumpkin patch with his wife and five children, a stranger offered advice that shook him to the core: “Carve your pumpkin from the bottom.” … he’s turned his not-insubstantial carving skills on an entire city.

– Forbes http://www.forbes.com/sites/joannmuller/2014/09/29/gilbertville-a-billionaires-drive-to-rebuild-the-motor-city/

gilbertville

 

Cut throats:

Now look, I’m a trial attorney. I can cut somebody’s throat and leave them to bleed out in the gutter with the best of them. But I didn’t want to do that. That’s not my role in this job. My role in this job is sort of the zen of emergency management.

– Detroit Emergency Manager Fascist and Jones Day Law Firm Bankruptcy Partner Kevyn Orr (June 10, 2013) http://www.freep.com/article/20130610/NEWS01/306100080/Kevyn-Orr-Wayne-State-University-emergency-manager-meeting

Carve outs:

Q: What is the scope of services for Jones Day’s contract with the City of Detroit?

A: The core restructuring with a fee cap, and “carve outs” (i.e., additional fees) for everything else.

David G. Heiman, the head of Jones Day’s global restructuring practice (i.e., Orr’s boss) and lead attorney in the Detroit Chapter 9 Bankruptcy (4/5/13) (As of mid-September 2014, Jones Day had reportedly billed Detroit nearly $50 million; Heiman bills $945/hour – a 10% discount!) http://www.wsws.org/en/articles/2014/09/17/detr-s17.html

“Finance, Ferguson and Orr”, by Shea Howell

After this deal with Syncora, the creation of the Regional Authority to run the water department, the transfer of more than 45,000 parcels of land to the Land Trust, the giveaway of city parks, schools and municipal buildings, and the extension of tax breaks to corporate interests, it is fair to ask: “What will be left of the city to return to its citizens?”

The deal involves a transfer of city land and extension of the Detroit-Windsor Tunnel lease to a Syncora subsidiary and a 30-year lease of a parking garage below Grand Circus Park. Syncora will also get $6.25 million in settlement credits to be used on eligible properties including Joe Louis Arena, other parking assets and real property located within three miles of the tunnel. Meanwhile, Financial Guaranty Insurance Company of New York, another bond insurer, said they intend to continue their objections to the city’s reorganization plan. So more closed-door sessions are in store as Jones Day lawyers offer up more of the city’s assets to appease Wall Street interests.

At the beginning of the bankruptcy trial, Judge Rhodes said he was not going to allow crisis thinking to control the process. He sent Orr and company back twice to rethink their generosity to banks. He said he would not accept a plan that did not seriously look at how to leave the city in a stronger position after bankruptcy. Now we are in a feeding frenzy. Syncora and Financial Guaranty Insurance are not only being given assets, but they are also laying claim to income streams. All of this is to protect their business of insuring banks that made questionable deals.

The essence of Kevyn Orr’s plan to get money to run the city includes depending on increased parking fines, outrageous fees for truancy and curfew violations, collection of back water bills from the poorest citizens, and refinancing debt. Perhaps Mr. Orr has been too busy preparing for court to have paid much attention to the news over the summer. He might have missed the fact one of the main reasons for the hostilities between the police and the community of Ferguson was the simple fact Ferguson tries to finance its budget through fees and fines. This is the number two item in their annual budget.

This is the direction Orr and company are pushing Detroit. Everything of value will be given away. Everything that could be turned into an asset to support the city will go to banks, corporate creditors and new authorities. Services from water and education to fire and police protection will be financed on a pay-as-you-use basis. The historic tensions between the police and community will be intensified, as they become the new “tax collectors” with a vested interest in more arrests, more tickets and more fines.

No open, democratic process would support any of these decisions. Voices for a fair, just, inclusive city are finding new ways to be heard. We have a vision of different kind of city.

See the full article here: http://michigancitizen.com/finance-ferguson-and-orr/

Guyette: Media blackout on banks’ role in Detroit’s financial crisis

Posted by: Posted date: May 28, 2014

By Curt Guyette
Special to the Michigan Citizen

http://michigancitizen.com/media-blackout-on-banks-role-in-detroits-financial-crisis/

Mayor Mike Duggan and Gov. Rick Snyder had nothing but praise last week when banking giant JPMorgan Chase and Co. announced plans to invest, through a combination of loans and grants, $100 million in Detroit over the next five years.

“I want to thank and applaud JPMorgan Chase and Co. for their generous investment and long-term commitment to the reinvention of Detroit,” said Snyder. “This multi-year initiative is coming at an excellent time to not only build upon, but help accelerate, the positive momentum happening in areas like workforce skills training, community development, growing small businesses and blight removal.

“With JPMorgan Chase’s strong ties to Detroit, I am so grateful for their willingness to give back to the community with a smart, sensible investment that helps further ensure that Detroit is on a sustainable path to recovery,” he said.

Duggan added, Chase’s commitment “represents a real vote of confidence in the work we are doing in Detroit right now.”

“It is also a significant investment in the strategies we are implementing to address blight in our neighborhoods, build our workforce and support small business and non-profits. I am grateful to (JPMorgan Chairman) Jamie Dimon and his team for stepping up to be a true partner in Detroit’s turnaround,” he said.

The media coverage, however, failed to make note the part JPMorgan and other banks played in the financial crisis that crippled cities such as Detroit. That role was summarized in a press statement released by the U.S. Justice Department last November:

“The Justice Department, along with federal and state partners, today announced a $13 billion settlement with JPMorgan — the largest settlement with a single entity in American history — to resolve federal and state civil claims arising out of the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS) by JPMorgan, Bear Stearns and Washington Mutual prior to Jan. 1, 2009.

“As part of the settlement, JPMorgan acknowledged it made serious misrepresentations to the public — including the investing public — about numerous RMBS transactions.  The resolution also requires JPMorgan to provide much needed relief to underwater homeowners and potential homebuyers, including those in distressed areas of the country.  The settlement does not absolve JPMorgan or its employees from facing any possible criminal charges.”

In that same statement, Attorney General Eric Holder points out that, “Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown. JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior.”

The dire consequences of that behavior are still being felt.

In May, the nonprofit Haas Institute released a report titled “Underwater America,” detailing the extent to which people owe more on their homes than the homes are worth.

“Despite home prices rising in many parts of the country, the total value of owner-occupied housing still remains $3.2 trillion below the 2006 levels,” according to the report. “Despite rising home prices, there are still some 9.8 million households underwater, representing 19.4 percent of all mortgaged homes — nearly one out of every five such homes. Underwater homeowners are significantly more likely to default on their mortgages than homeowners with positive equity.”

The report identified Detroit as the fifth hardest-hit city, with 47 percent of its homes underwater, and, as of last year, more than 4,000 homes in foreclosure.

Along with the devastating impact this has on individual families, there are the immense civic costs — in the form of lost population and decimated property taxes — cities such as Detroit continue to experience as the crisis drags on.

Among the few journalists casting a critical eye on last week’s hoopla was David Dayen, who writes for the online publication Salon.com.

“Beware of big banks bearing gifts,” wrote Dayen. “That note should be attached to JPMorgan Chase’s much-hyped planned investment of $100 million in the City of Detroit. The move is mostly an effort to boost the embattled bank’s public image, in a part of the country where they have deep roots. But corporate philanthropy like this also hopes for a return on investment –—often in the form of the privatization of public infrastructure, which JPMorgan Chase certainly has in its sights.”

“Indeed,” noted Dayen, “Detroit is currently embroiled in debate over whether to sell off its public assets for much-needed cash to pay off creditors.  The city’s emergency financial manager has issued a request for offers to privatize its water system. They’ve already privatized garbage collection, selling that off to two contractors. Banks like JPMorgan Chase are well-positioned to profit from this fire sale…”

Think of it as a circle.

The banks, through malfeasance, create an economic crisis and a tidal wave of foreclosures, which delivers a critical financial blow to the city of Detroit. An emergency manager is appointed, bankruptcy is declared, and public services are privatized. And, as the city discusses selling off its water and sewage treatment facilities, the banks however, are looking to cash in on the calamity they created.

http://michigancitizen.com/media-blackout-on-banks-role-in-detroits-financial-crisis/

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