Emergency Manager Wants to Sell Off City's Precious Art, While Banks Get Fatter
This piece was originally published by The Weeklings.
Detroit is like a canvas of chaotic art, a Gerhard Richter or Pollock, standing starkly out against the blank white room that surrounds it. You find yourself drawn in, compelled to stop and gaze at it. Whether it’s ruin porn or the saga of Kwame or now our new state-appointed Emergency Financial Manager, it’s hard to look away.
The national press has duly documented this most recent drama, how Governor Snyder appointed Kevyn Orr as the Emergency Financial Manager to studiously go through the city’s books and find a way to stave off bankruptcy. Orr is like some old man in a ramshackle rooming house desperately digging through every drawer to find change for the fare as the sound of the last bus barreling down the street shakes the whole stucture. It isn’t pretty.
Recently, Mr. Orr made the surprising suggestion that the city pay off its debts by selling various treasures from the Detroit Institute of Art. The thought being that an auction of a few pieces by Van Gogh, Matisse, Bruegel and Copleys might be enough to satisfy our hungry creditors. I’m sure he had a good reason for suggesting such a thing (after all, city services can’t really be cut much deeper. As the excellent documentary “Burn” points out, this is a city where the Fire Commissioner vacuums his own office). Still, the logic behind Mr. Orr’s tactic escapes me. Since a variety of legal constraints exclude the possibility of any works being sold, all his proposal did was make a lot of very serious people extremely upset. Perhaps that was his goal, who knows. I sincerely believe he has good intentions. As opposed to many here who view him and his mission with suspicion – many were angry at him before he even began –I wish him every success and I do not envy him his task.
His is an exceedingly difficult job. This week he is going into negotiations with the various institutions that own Detroit’s city bonds, institutions that include various large banks.
If he were to ask me, I would offer one very simple solution: Ask the banks to pay back the banks. Maybe not all of the debt, but they could cover a good chunk of it and without even having to write a check.
I am not talking about a loan; we are poor as church mice with nothing to mortgage really (except for perhaps JosÃ© Valverde’s contract; seriously, we’ll give that to you cheap). Also, I am not asking for a favor or a kindness or an act of benevolence. And I am not talking about class war; no, nothing fancy like that. But there is a logic to why they should help us out, and it goes like this:
Over the past decade, the banks have evicted many, many people in Detroit from their homes.
These were people who either did or did not deserve to be evicted. Perhaps they did not deserve loans in the first place. I am not interested in going over any of that at this time; mine is a very a different point.
For what is interesting is what happened next:
After these evictions occurred, the banks did not foreclose the homes. They simply let the houses rot.
In other words, as opposed to following the due diligence of a functioning system, wherein these banks would have gone through the legal process of actually foreclosing the home, earning back the home’s title, and then paying the taxes on the property until the property was sold to a new owner, they did nothing. They simply walked away.
So, for starters, they owe taxes on those homes. Not just a few homes; thousands of homes. That’s lot of taxes. When you’re done adding everything that’s owed, it’s probably worth more than a few Chagalls.
Then there’s this: by letting those homes rot, these banks caused the depreciation of all the other homes in all those neighborhoods, block after block, along nearly every avenue, street and boulevard. Each one of these abandoned homes pulls the value of all those other buildings down.
These banks were like the shark in Copley’s famous painting (at the Detroit Institute of Art, of course), attacking the vulnerable drowning figure in the water. The victims were honest and hard working, and their homes were suddenly worth less. What followed was predictable: a shrinking tax base, the city unable to pay its bills, cut services. So now the police don’t show up, the firemen are understaffed, people are less safe, people move away, more homes stand empty, and the banks didn’t know or didn’t care. Having made the money they were going to make, they simply swam on.
Now, I am not a trial lawyer, but I bet the thought of all these neighborhoods – Boston Edison, the Villages or Hubbard Farms – coming together for some sort of class action lawsuit might get a bank lawyer a little twitchy. Who wants to defend yourself against a struggling, working class mother whose backyard was turned into a slum? Who wants to see children on the witness stand whose neighborhoods were gutted while your corporation raked in millions and then invested it in other places, in other assets, like, for instance, art.
If you could see them, you’d realize that the art collections of the world’s banks are truly phenomenal. But unless you are a client or a staff member of the bank, you generally can’t see them. JPMorgan Chase’s collection was started by David Rockefeller in 1959. UBS has 35,000 objects, including a Lichtenstein worth $4.5 million. Deutsche Bank has a slightly larger collection; its 37,000 objects make it the largest corporate art collection in the world. Bank of America believes their collection should be available to the public to see, which is generous of them – sounds sort of like a museum – but, according to Forbes, they also refuse to share information about their collection with the general public, making it not like a museum, really, at all.
So my advice is this, I think the emergency financial manager, or perhaps the state Attorney General, should ask these banks for their art. Not all of it; only enough to cover the damages of their foreclosure walkaways, both the taxes they haven’t paid on those homes and the depreciation they’ve caused on all the surrounding property. The Detroit Institute of Art could host an auction and sell these “donated” works off. We’re not greedy, we don’t want much, we’ll only take what we need to get by. I’m betting we could do a lot of good with a couple hundred works of art. Most of these banks would probably not even notice the art was gone, if they even noticed it was there in the first place. (And, looking at that Lichtenstein outside the conference room above, we’re wondering who actually notices it in the office). The best part is, it’s easy for them. Like I said, they won’t even have to write a check.
I know, it’s a pipe dream. Business is complex. As well-intentioned as he no doubt is, the emergency financial manager is probably not seeking any truly creative solutions. He will be forced to speak in the language of the bond traders, who speak in the language of the bankers, who sit in their offices surrounded by all the works of art their profits have paid for, wondering how it was Detroit got itself into this mess in the first place.
No one has time to think it through. It’s a fraternity of returns and profits and endless appetite. They are not interested in the people in those neighborhoods they have ruined. Like the dead-eyed and hungry beast in the Copley painting, they have eaten through Detroit without any real fear of accountability or justice. And now, as we watch, they are preparing to sink their teeth into it again. They really can’t help themselves. It is simply too delicious.