Detroit City Council tells EM and banks, ‘No!’

Oct. 21 — In a unanimous vote today, Detroit’s City Council refused to rubber stamp the state-appointed Emergency Manager’s plan to pay off loans called “interest rate swaps” that would cost the city millions of dollars in inflated interest to the banks. Detroit residents, who had filled all the seats in the small chamber to take turns speaking against the banks, erupted with cheers and claps at the vote.

This very important resistance by elected officials comes just days before a trial on Oct. 23-24 to examine if the EM’s bankruptcy plan can go forward. Demonstrators will be at the Detroit Federal Courthouse at 231 W. Lafayette St. beginning at 8 a.m. on Wednesday, Oct. 23, to say that the banks owe Detroit, and not the other way around.

The Council’s action today derailed a sneak play by the EM to pay off some very questionable financial agreements and exempt them from the bankruptcy process, through a short-term $350-million loan from Barclays.

The EM plan offered the bank a much more favorable rate than is likely to be approved in bankruptcy court. The Barclays deal that was defeated today would have channeled all revenue from casino and income taxes directly to Barclays. As if that weren’t enough, it stipulated that when the loan came due, any city asset worth $10 million or more would have to be sold. But Detroiters have learned to cut through all the obscure language and reject the bank’s plan, especially since Barclays was exposed for its role in the global economic crisis and pleaded guilty to rigging the LIBOR rate, which governs interest rates on municipal bonds.