Free Republic

Detroit's workers and retirees are no longer just fighting the emergency manager over their pensions - they're fighting each other. Fox 2's Charlie LeDuff explains the two Detroit pension funds: one for police and fire and the other for other city employees such as secretaries and janitors (known as the General Retirement System). City workers explain why they don't want to be lumped in the same pension category.

Officially, the City of Detroit is the largest municipality in U.S. history to enter Chapter 9 bankruptcy.

Local Media is covering it on TV and Radio, the Judge is laying out the potential reasons for, local TV people noting what is going on, the Court is not live if you will, data must be coming to them via text etc...

[...] What is being overlooked is the new and higher deductibles and total annual out-of-pocket expenditures, especially in the Bronze and Silver plans. The amount of these greatly exceeds the ability of most individuals and families to pay, thus providing the real possibility of personal bankruptcies due to medical bills and high losses for providers who cannot collect. [...] So what will happen? The family, being responsible citizens, will initially try to pay the bills, but that will soon prove impossible. They will ultimately default. And in any case, they will most likely end any college planning or retirement savings...

The U.S. Treasury Department said it expected to sell its remaining shares of General Motors by the end of the year, a plan that may leave taxpayers with a shortfall of about $10 billion on the automaker’s 2009 bailout. It must be nice to be bailed out by Uncle Sam. Most companies go through the bankruptcy process without the Federal government interfering with the proceedings. But what about Fannie Mae and Freddie Mac, the beleaguered mortgage giants held in conservatorship by the Federal Housing Finance Agency (FHFA)? More to the point, why didn’t the failed giants go into bankruptcy instead?...

Back in July, the city of Detroit filed for the largest municipal bankruptcy in United States’ history, with the city owing more than $18 billion in debt and liabilities following decades of purely blue leadership. The city’s appointed financial managers have already gotten to work on digging the city out of the massive hole into which it dug itself over the years, but not without the requisite challenges and lawsuits from unions and pension funds irate about the major losses that are going to be foisted upon everyone involved — and all of the work the city has done so...

Scranton could be headed towards another fiscal crisis like the one that resulted in city workers having their pay cut to minimum wage in 2012... Moody’s warned investors that Scranton could be facing the threat of default or bankruptcy thanks to a $20 million budget gap for the fiscal year that begins Jan. 1. The city is supposed to approve a new budget by Nov. 15, which would have to close that deficit to balance the budget. ... A similar crisis hit the city in July 2012, which lead to Mayor Chris Doherty cutting all city workers’ pay to minimum...

Desert Hot Springs, the resort town near Palm Springs, may become the first city since Detroit to seek bankruptcy protection from creditors ... Chapter 9, it would be the fourth California city since June last year to do so.

Outgoing Detroit Mayor Dave Bing says the once-thriving automotive capital of the world had no choice but to file for bankruptcy after it “hit bottom,” buried by high pension and health care obligations and millions of dollars in bond debt. But Bing told The Associated Press that while he anticipated the decision to make Detroit the largest city in U.S. history to seek bankruptcy protection, he remains convinced the state could have done more to help Detroit avoid it. … (Michigan Gov. Rick) Snyder’s office says the governor and legislators have found ways—outside of a state bailout—to help Detroit. These...

Bill de Blasio overwhelmingly was elected mayor here Tuesday, becoming the first Democrat to lead New York in 20 years and ushering in an era of activist liberal governance in the nation’s largest city. In early returns Tuesday night, de Blasio was soundly defeating Republican Joe Lhota, a protégé of former mayor Rudy Giuliani. De Blasio campaigned on a mantle of progressive change following Mayor Michael R. Bloomberg’s 12 years in office, highlighting what he saw as “a tale of two cities.” The moneyed Manhattan elite have had their mayor, he argued, and now the 46 percent of New Yorkers...

Editor's Note: This column was co-authored by Prof. Richard Vedder, the Distinguished Professor of Economics Emeritus at Ohio University. Cincinnati and Detroit are separated by barely more than 250 miles – a five-hour drive at worst, or under an hour by plane. Despite this proximity, many Cincinnatians would prefer to believe that Detroit’s horrendous fiscal situation couldn’t possibly hit their city. Not so fast. As the largest bankrupt city in America, Detroit has seen its population drop by more than half, unemployment soar to well over double the national average, and services decline. This is what happens to a locality...

Detroit Emergency Manager Kevyn Orr said Tuesday he could force a legally binding settlement on the city's creditors if they were unwilling to accept a proposed restructuring plan in bankruptcy court. The "cram down" provision of federal bankruptcy law allows a judge to approve a plan of restructuring over the objections of creditors, so long as at least one impaired class of creditors votes to confirm it.

Reuters may get the award for the worst headline of the year. “Detroit pension cuts ‘function of mathematics’ -investment banker.” It just told me that Detroit pensions would be cut. But what you learn later in the article is pretty shocking: “Buckfire, a Detroit native and investment banker with restructuring experience, later told the court the city plans to pay unsecured creditors, including the city’s pensioners, 16 cents on the dollar. There are about 23,500 city retirees.” 16 cents on the dollar? Quite a haircut! Well, that is what happens when municipal government spends too much money (inefficiently) and suffers...

**SNIP** Nonetheless, unions and pension funds are challenging Detroit on the eligibility question. They claim emergency manager Kevyn Orr, who acquired nearly unfettered control over city finances following his appointment by Michigan Gov. Rick Snyder, was not genuinely interested in negotiating when they met with his team in June and July. Orr insists pension funds are short $3.5 billion and health coverage also needs to be overhauled. Evidence will show that Orr “planned to file bankruptcy long before the purported negotiations had run their course, confirming that the ‘negotiations’ were no more than a check-the-box exercise on the way to...

Thousands of Detroit streetlights are dark. Many more residents have fled. Donors are replacing ambulances that limped around for 200,000 miles. Millions in debt payments have been skipped. Is there really any doubt the city is broke? A judge starts exploring that question Wednesday in an unusual trial to determine whether Detroit indeed is eligible to scrub its books in the largest public bankruptcy in U.S. history. Unions and pension funds are claiming the city failed to negotiate in good faith before filing for Chapter 9 protection in July. …

Another sign of the tough times in Washington these days, the White House Gift Shop, long run by a nonprofit group that helps uniformed Secret Service officers and their families, has gone broke.The Secret Service Uniformed Division Benefit Fund, which traces its roots to the 1940s and for years did business as the official White House Gift Shop, lists more than $600,000 in liabilities in a pending bankruptcy petition in Washington. The fund — which operated independently of the White House and Secret Service, and was not a part of the government — disclosed tens of thousands of dollars in...

After the housing crash of 2008, millions of US borrowers were suddenly plunged into a negative equity position of their homes where the amount they owed to lenders exceeded the value of the property. The problem was so bad that it has motivated cities to consider eminent domain to seize the underwater debt of borrowers (as in Richmond and San Bernardino California). Here is a recent map of negative equity from Zillow. zillowmapofnegeq These borrowers have nothing on Uncle Sam. Uncle Sam now owes $17 trillion to bondholders. GFDEBTN_Max_630_378 (3) Currently, Uncle Sam has public debt equal to 100.46% of...

Have you ever noticed how often cities where there are very few Republicans elect Republican mayors anyway? Or if they don't elect a Republican, they elect a Democrat who acts like a Republican. New York City is known for being a bastion of liberalism. But the city hasn't had a real liberal mayor for almost 40 years. When Jersey City, New Jersey, elected Republican Bret Schundler as mayor, there probably weren't more than five Republicans living in the whole city. Democrats have outnumbered Republicans in Dallas County, where I live, for quite some time. Yet Dallas has never really had...

New York City Opera said Tuesday it is shutting down and filing for bankruptcy protection after seven decades as a fixture on the metropolitan cultural scene. The company announced Sept. 12 that it needed to raise $7 million by the end of September. Spokeswoman Risa Heller said about $2 million had been raised, plus another $301,019 was pledged from 2,108 donors in an online campaign. … Junior to and often feistier than the Metropolitan Opera, City Opera was a spawning ground for top opera talent that included Beverly Sills, Placido Domingo, Renee Fleming and Samuel Ramey. But it was derailed...

State-appointed emergency manager Kevyn Orr wants to overhaul Detroit’s two pension systems by shutting out new workers and freezing benefits for current members. … In July, Orr made Detroit the largest U.S. city to file for bankruptcy protection. …