Legislator Blames 'Shady Bankers' For Detroit's Problems Despite Voting To Double Debt

In June 2009, the city of Detroit's unrestricted deficit had nearly doubled from the previous year, increasing from $501.3 million to $920.2 million, according to the city's financial audit.

The state Legislature responded by approving a bill about six months later that doubled Detroit's ability to finance more debt.

Sen. Young At the time, Mackinac Center Senior Legislative Analyst Jack McHugh wrote a blog titled, "Is Another Credit Card the Solution to Detroit's Spending Problem?"

State Sen. Coleman Young II, D-Detroit, evidently thought the extra borrowing option was a good one because as a then-state representative, he became a sponsor of House Bill 5626 in 2009. Then-Gov. Jennifer Granholm signed the bill in February 2010 and Detroit's ability to finance debt via bonds doubled to $250 million.

Five years later, Detroit's spiral to bankruptcy has been well chronicled and there were few serious attempts to fix the structural problems that have plagued the city for decades. City officials and many in the Legislature resisted potential solutions such as selling even a single piece of art, privatizing services or selling the city's water and sewerage department.

Instead, the Legislature passed another deal where Michigan taxpayers would bailout the city of Detroit for $195 million.

Five years later, Sen. Young had harsh words for those who allowed the city to go into more debt. Except, he wasn't blaming his fellow legislators, but "shady bankers."

"Yes, the collection of the Detroit Institute of Arts will not be sold off to pay shady bankers who made loans to a city who know they couldn't afford it — the definition of predatory lending," Young said after the bailout was finalized by the Legislature.

"If the lenders were 'shady' and 'predatory' then what does that make the 75 House and 30 Senate members — including then-Rep. Coleman Young II — who voted in 2010 to double how much Detroit could borrow to cover current expenses and paper over its overspending a little longer?" McHugh said, also noting that Rep. Young cosponsored the bill. "Members of the Detroit political establishment blaming lenders for the city's fiscal malpractice is like someone with a gambling problem blaming the ATM machine for delivering cash to buy more lottery tickets."

I worked for a city where our local, self professed Reagan conservatives nearly bankrupted the city twice! Their excuse was that staff was incompetent and they never got accurate financial statements, so it was their fault that they approved spending because the numbers were wrong, even though they had been directly told time after time what would be the consequences.

As u said this happened twice. They were all thrown out if office in 2006 but they fooled the public again promising they learned from their mistakes and got reelected in 2009! And as soon as they were sworn in they started to request more spending as they were not part of the recently adopted budget process.

RE :”Yes, the collection of the Detroit Institute of Arts will not be sold off to pay shady bankers who made loans to a city who know they couldn't afford it — the definition of predatory lending,” Young said after the bailout was finalized by the Legislature.
McHugh said the Legislature isn't free and clear of blame.
“If the lenders were ‘shady’ and ‘predatory’ then what does that make the 75 House and 30 Senate members — including then-Rep. Coleman Young II — who voted in 2010 to double how much Detroit could borrow to cover current expenses and paper over its overspending a little longer?” McHugh said, also noting that Rep. Young cosponsored the bill. “Members of the Detroit political establishment blaming lenders for the city's fiscal malpractice is like someone with a gambling problem blaming the ATM machine for delivering cash to buy more lottery tickets.”

Entertaining.

Translation : “We are not going to pay back our creditors because they knew we could not afford to pay them back when we borrowed the $$$ from them”

Certainly not the first to use that logic, but given that who wants to lend them more?

Reminds me of Obama's student loan program : "We lend you lots of (others) $$$ and you can pay it back later if you can afford it"

3/31/14 DETROIT FREE PRESS / How political corruption
deepened Detroit's crisis / By Tresa Baldas and Jim Schaefer

Kwame Kilpatrick mug shot.

EDITED Former Detroit Mayor Kwame Kilpatrick was sentenced to 28 years in prison for running a "money-making racket" out of city hall that steered upwards of $73 millionsto himself, his family and friends while the impoverished city hobbled along. VPC

Kilpatrick was convicted on 24 of 30 counts of extortion, racketeering, bribery. Prosecutors had argued he deserved stiff sentence because he never thought he did anything wrong

Kilpatrick was sentenced to 28 years in prison for running what the government called a money-making racket out of City Hall. Kilpatrick had steered millions to himself, family and friends while an impoverished Detroit hobbled along, prosecutors said.

Kilpatrick, 43, was found guilty March 11 on 24 of 30 counts of corruption, including five counts of extortion, racketeering, bribery and several mail, wire and tax fraud charges. On three counts he was found not guilty, and on the remaining three no verdict was reached.

Kilpatrick took bribes, misused nonprofit funds and "used his power as mayor ... to steer an astounding amount of business" to his friend and co-defendant, Bobby Ferguson, who also was convicted on charges of running a racket out of the mayor's office. He chose to waste his talents on personal aggrandizement and enrichment. We lost transparency. We lost accountability.

Judge Nancy Edmunds, U.S. District Court said she will recommend Kilpatrick be sent to a prison in Texas, where his family lives. The judge said Kilpatrick lived the high life, hosting lavish parties, accepting cash tributes and loading the city's payroll with friends and family.

"He chose to waste his talents on personal aggrandizement and enrichment," Edmunds said. "We lost transparency. We lost accountability. ... That way of business is over. We're done." Detroit's present mayor, David Bing, echoed that sentiment.

The involvement of city officials and others compounded the seriousness of Kilpatrick's crimes, Edmunds said. Thirty-four others, including Kilpatrick's father, have been convicted in this public corruption case. (Kwame's mother, Carolyn, was also jailed for corruption while serving in Congress).

Assistant U.S. Attorney Mark Chutkow called the Kilpatrick case one of the most significant cases of public corruption in the country. While Kilpatrick was mayor, Ferguson received more than $127 million in contracts, according to the government. Of that, at least $76 million in contracts were obtained illegally through the pair's extortion scheme, which involved elbowing competing contractors out of deals and shaking down others to cut Ferguson in on their contracts.

Contributing: Gina Damron and Tammy Stables Battaglia, Detroit Free Press

SOURCE http://www.usatoday.com/story/news/nation/2013/10/10/detroit-mayor-kwame-kilpatrick-sentencing/2958517/

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