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Federal Judge Describes, Then Supports Plot to Rob Detroit Pensioners

This is what it looks like when a federal judge declares a city bankrupt—to the surprise of its residents and elected officials.

Photo Credit: Hanley


On December 3, United States Bankruptcy Judge Stephen A. Rhodes—to the surprise of no one—formally ruled that Detroit is “eligible” for bankruptcy. In other words, creditors will now wrangle over Detroit’s government assets with Rhodes as the referee.

It is important to understand that at no point has Detroit declared or requested bankruptcy. Indeed Detroiters and others in Michigan have resisted as best they could, only to be overpowered at every turn. As Judge Rhodes explains below, bankruptcy has been orchestrated from Lansing (the state capitol) with a lot of help from Wall Street banks and other financial players.

Taking power away from Detroiters began decades ago. As the city's African American population grew, so did the forces trying to deprive it of democracy and assets. A tangled web of bipartisan power grabs steadily shifted revenue and decision making to the suburbs, state government and predatory lenders. Far from helping the city—although onlookers wouldn't know it based on loud, public proclamations to the contrary—the end result crippled Detroit and ushered in its fall.

Starting in 1999 Lansing's state government decided it was in their bailiwick to manage the Detroit Public Schools, a task historically overseen by elected officials. The result? School performance worsened, which resulted in the departure of more residents. Combined, these two factors only sped up the area’s decline.

That colossal failure notwithstanding, from the day he took office in January of 2011, Governor Rick Snyder maneuvered to take even more power and resources away from Michigan’s predominately African American cities. The more he succeeded in doing so, the more difficult life became for residents of those cities.

So far, efforts to put the brakes on this process have failed. Most dramatically, the voters of Michigan repealed Governor Snyder’s emergency manager law (P.A. 4) in a statewide referendum held last November. His lame duck super majority co-conspirators in the Michigan legislature promptly enacted a still worse version. State courts repeatedly found ways to support the Governor’s take-over powers.

Now, a federal judge has also ruled in favor of continuing the very same dynamic.

 If you think about the historic moment unfolding before us with the rationale that Detroit is an unfortunate outlier on the scale of thriving, solvent versus sad, “dysfunctional” U.S. cities—with Detroit falling squarely in the latter category—think again. Every public sector worker’s retirement security in the form of a pension is seriously imperiled. This is only compounded by the fact that Judge Rhodes’s decision greatly expands the leverage of those who want to reduce or eliminate them.

The entire process of taking over the governments of Detroit and other cities is also deeply disturbing if you believe that ordinary people ought to have at least some means to balance the interests of the one percent.

Finally, the point here is not to endorse Judge Rhodes’s version of the opposition to the bankruptcy. Ultimately, his theory of “bad faith” is a straw man characterization designed to help justify his commandeering of the city’s future. It completely ignores decades of white racism and other social and economic factors in favor of a simple conspiracy theory.

That said, it is still a revealing insight into how Rhodes—himself an agent of the one-percent—perceives the behavior of his own allies.

Below is a verbatim excerpt from two sections of Judge Rhodes’s 140-page opinion:

Pp. 127- 130 of the 12/5/13 opinion:

The Objectors’ Theory of Bad Faith

In section 3, below, the Court will review the factors upon which it relies in finding that the City filed this case in good faith. First, however, it is crucial to this process for the Court to give voice to what it understands is the narrative giving rise to the objecting parties’ argument that the City of Detroit did not file this case in good faith. The Court will then, in section 2, explain that there is some support in the record for that narrative.