How Wall Street is Bleeding Detroit Dry

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http://www.commondreams.org/headline/2013/11/21-6



Report finds worker and retiree pensions are not the culprit

How Wall Street is Bleeding Detroit Dry
- Sarah Lazare, staff writer
Published on Thursday, November 21, 2013 by Common Dreams

Shady Wall Street dealings and massive corporate subsidies are responsible for Detroit's financial nosedive, not worker and retiree pensions, a report published Wednesday reveals.

Released by Wallace Turbeville, a former Goldman Sachs investment banker who now works for the think tank Demos, the study takes aim at Detroit emergency manager Kevyn Orr's claims that workers and retirees are to blame for Detroit's shortfall.

“To say the pension fund killed the city, it’s like if you were stabbed, strangled and blown up, did you die from the strangling?” Turbeville said, according to The Huffington Post. “That’s why I find this whole thing illogical, except for the fact somebody didn’t like pensions."

Turbeville singles out Detroit's risky financial dealings with big banks as "a great threat to the city." In 2005 and 2006, the city financed its $1.6 billion in debt through a series of complex swap deals with "hidden risks." The report explains,

The deals included provisions that would allow the banks to terminate the swaps under specified conditions and collect termination payments, which would entitle the banks to immediate payment of all projected future value of the swaps to the bank counterparties. Such conditions included a credit rating downgrade of the city to a level below “investment grade,” appointment of an emergency manager to run the city and failure of the city to make timely payments.

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