Petition, please sign and share widely. THE ISSUE: PREDATORY LENDING HAS COST DETROIT NEARLY $1 BILLION IN CITY REVENUE In 2005, the City of Detroit took out $1.44 billion in debt to fund the city’s pension liabilities. The deal included $800 million in interest rate swaps with big Wall Street banks. These interest rate swaps were supposed to protect the City of Detroit from rising interest rates on city debt. Nearly a decade later Detroit’s perceived pension liabilities are still haunting the city as Detroit was forced to pay banks $50 million a year and pledge nearly $4 million a month in casino tax revenue as collateral. Since 2008, the City of Detroit and the water department have sent nearly $800 million in unnecessary payments to Wall Street banks on various swap deals, including a $550 million payout just last year. Wall Street banks Barclays, Bank of America and UBS stand to profit from Executive Order #17, a bad settlement deal to pay $250 million to terminate bad interest rate swap deals from 2005 and 2006. Detroit Emergency Manager Kevyn Orr’s Executive Order #17 proposed a $350 million Debtor in Possession (DIP) deal with Barclays Capital to pay off the termination fees on swaps with big banks Bank of America and UBS. Under this new deal, the Barclays loan is secured with income tax and casino tax revenue, and net cash proceeds from the possible sale or lease of city assets exceeding $10 million. Bank of America and UBS want to cash in on Detroit’s seniors and retirees, costing them up to 90% of their income to secure hundreds of millions in Wall Street predatory lending. On October 21, 2013, the City of Detroit and progressive groups including Michigan Forward rejected this deal; keeping hundreds of millions of city revenue in the City of Detroit. In a resolution to Governor Rick Snyder, the City of Detroit’s rejection counter-proposed that any loans be used to strengthen revenue and revenue collection.
Posted on: Fri, 08 Nov 2013 11:09:17 +0000
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