Applying public pressure works

A six-member team was put together late last year to study the financial situation in Detroit. Their report is now out. The basic finding is that the situation is dire and not sustainable, Detroit is about to run out of money, and the Mayor and City Council have no plan to restore solvency even though they were put on notice many months (years?) ago. Here is a radio feature on the report, though I haven't listened to it.

Gov. Rick Snyder is now pondering what to do. The city's deficit is $327 million and its debt is $14 billion. His options include appointing an Emergency Manager (under the law quickly passed after the previous EM law was tossed out by voters last Nov.), guide the city into bankruptcy, or both (with the EM doing the guiding), or neither (not sure what options are then available -- let the City Council continue?).

Yesterday Snyder told reporters he blames the situation on six decades of population loss in Detroit. Well, yeah, true enough. So, says Snyder, the way to rebuild Detroit is to rebuild the population.

John Gallagher, in his book Reimagining Detroit, strongly disagrees. Most suburbanites are simply not going to move to the city, certainly not a million of them. Gallagher then outlines how Detroit can be a successful city with a small population.

I try not to do any name calling in this blog, but this is one of those times when I feel it is quite appropriate. My response to Snyder: Idiot. Not many are going to move to Detroit until it gets its finances under control and has a responsible city government. Basing a financial recovery plan on people moving to the city, when they're not going to move to the city until that plan is successful, is idiotic.

On occasion I've take part in protests by Moratorium Now! and Detroit Eviction Defense. The Detroit "alternative" newspaper Metro Times has an article about the group and their efforts. Much of it is such things as guiding homeowners with mortgage troubles, blocking eviction dumpsters, showing up at court for eviction hearings, protesting banks, providing alternative nonprofit financing, and rallying neighborhoods. They want to spread the word that "Applying public pressure works."

The group's current efforts are in two parts. The first is to publicize "Hurricane Fannie" named after Fannie Mae, the government chartered corporation that guarantees mortgages with taxpayer money. There may not be as much flooding as Hurricane Sandy, but there is as much devastation. A bit reason why Fannie Mae is so quick with foreclosure is if the owners are booted, the bank gets 100% of the loan. That doesn't happen when the property is sold or the mortgage is reset. And that money comes out of taxpayer pockets. Yup, the purpose of Fannie Mae is to protect bank profits.

The other current effort is to use Freedom of Information Act queries to expose the terms of loans and bond sales that have kept the city of Detroit afloat. There are strong suspicions that those transactions were built on fraud. That's right, the banks were not satisfied with sucking the value out of housing in Detroit, they allegedly turned to the city gov't to suck the value out of that.

I'm now rooting for bankruptcy which will end those deals.