Thinking for ourselves
By Shea Howell
Week 46 of the occupation
February 18, 2014
The plan proposed by Emergency Manager Kevyn Orr to address Detroit’s financial crisis is finding its way to court. Its outlines how the Emergency Manager expects to deal with debt, pensions, and services.
The Plan of Adjustment and the thinking behind it have been kept from the public. Bits and pieces have emerged in press accounts, indicating that Orr intends to offer pensioners more than the banks. He has been forced into this position. He started this process offering banks 75 cents on the dollar and pensions 10 cents.
The plan itself has had no public debate. It is the work of lawyers who met with each other behind closed doors and have no stake in enhancing the life of the city or its people.
In a recent editorial summing up the EM plan, Stephen Henderson said the formula was simple: “Screw the banks and take a short term hit on the city’s borrowing ability.” Henderson goes on to worry about what it means for a city to slash secured debt, noting this is “unheard of and will inspire an epic fight from the banks.”
Henderson makes his living using language. Much as I like the sentiment, “screw the banks,” this kind of framing does a disservice to Detroiters and all people who are thinking about the conditions created by unscrupulous and greedy financial manipulators.
This is not about “screwing the banks.” That implies that banks have some rightful claim. They do not. This is about justice for the people of Detroit. The banks have “screwed” us. We are not “screwing” them. The immediate loan in question was possibly illegal and certainly unethical.
Moreover, the financial crisis of 2008 was precipitated by willful avarice and explicit lending practices of banks. Because of this our neighborhoods were decimated. As a result we suffered a dramatic loss in population and of taxes. This lose was combined with layoffs in the public sector where many Detroiters found employment.
So let us be clear. The banks have screwed Detroit.
Long before the debacle of the loans of 2005, banks routinely engaged in lending practices that distorted development and embedded racist practices in housing patterns. It took federal intervention to create equity in lending and to stop redlining. It took lawsuits and constant vigilance to get banks to clarify and disclose lending practices.
Banks, not city workers, are directly responsible for much of this current crisis. They have been found guilty of criminal practices.
For example, at the beginning of this month, in its latest settlement, JP Morgan Chase agreed to pay $625 million because of its lending practices. Announcing the agreement.
U.S. Attorney Preet Bharara said the company had for years participated in federally subsidized programs meant to make homes more affordable for millions of Americans.
“Yet, for more than a decade, it abused that privilege,” he said. “JPMorgan Chase put profits ahead of responsibility by recklessly churning out thousands of defective mortgage loans, failing to inform the government of known problems with those loans and leaving the government to cover the losses when the loans defaulted.”
Just three months earlier JPMorgan Chase agreed to pay $13 billion in a civil inquiry into its sales of low-quality mortgage-backed securities. It also announced it had reached a $4.5 billion settlement with 21 major institutional investors over mortgage-backed securities issued by it and Bear Stearns between 2005 and 2008.
Henderson perpetuates the idea that this financial crisis is somehow the fault of the city of Detroit and that we are unfairly taking advantage of the banks. The facts do not bear him out. Rather this is part of a long struggle for justice as we develop new ways to support our common needs. The mainstream media seems blind to even this small step toward justice for our city.