Detroit's bankruptcy judge ruled on Thursday that the fee structure of a $350 million agreement between the city and Barclay's Capital must be disclosed, despite their efforts to keep them secret.
I don't know anything about this judge Steven Rhodes, but I like him.
James Saakvitne, managing director of Barclays municipal liquidity origination group, testified that the bank's competitors would benefit from knowing how much Barclays charges for DIP financing.
When he added: "It's very important to us to be there to help the city," Rhodes interrupted him, saying: "Hold on. What's very important to you is to make money."
Saakvitne later warned that, "if all fees are going to be made public, that might put a real chill in the market and (scare off) lenders from being willing to show their pricing model."
"So much for being willing to help the city, huh?" Rhodes responded.
As
Electablog noted in detail last month, this deal with Barclays Capital not only puts paying off the banks ahead of the city workers and pensionees, but it practically ensures state-control over Detroit finances for the forseeable future.
This Executive Order 17 has a poison pill with it. It says that, if the Emergency Manager leaves, that it immediately places this loan in default. That gives Barclays and Bank of America and UBS direct access to Detroit city income taxes as well as our casino revenue, taking at least $8 million immediately every month as long as the city of Detroit does not have an Emergency Manager or doesn't have state receivership. So this is all a ploy to keep the city of Detroit pretty much without local representation, having no say over their finances or how they govern themselves.
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The fact is that Detroit is in the financial emergency that it currently in because of past loans used to pay off past debt. This move to take out yet another loan may reduce the overall debt owed by the city but has the end result of ensuring that large banks step to the front of the line and are paid off first. Note that none of the $350 million is earmarked for ensuring that Detroit pensioners are protected. Rather, they are left to fight over the remainder with all of Detroit's other creditors.
Look how this fits in with the overall narrative conservatives use to denigrate the city of Detroit during this state of affairs. It's the greedy and lazy city workers and their cronies who are responsible for ruining the city of Detroit, taking out massively irresponsible loans and burying the city in financial ruin.
But what of the actual banks who gave them these loans, profited from them, and continue to profit from them? Not only do they refuse to share any of the blame for their roles in this, but they still find ways to simultaneously continue the cycle that led Detroit to where it is today as well as profit from it.
Detroit, better than any other city, rather, any other entity, provides a stark depiction of the clash between the Conservative and Liberal narratives that vie for dominance over our cultural understandings of the US capitalist system. We see without any sort of blinders what happens when the large finanicially-powerful corporations are treated as the Gods, and everyone else as the Clods.
I don't think anyone who has been paying attention to how Rick Snyder and his appointee Kevyn Orr do things is surprised that they are trying to keep the terms of this deal with Barclays under wraps. I can't wait to hear what people who are experts in this area find about this deal.
But without a doubt, even with the Detroit Bankruptcy as tragic as it is, someone is finding a way to profit from it.
And, if I was a betting man I would wager, it won't be anyone from Detroit.