CA take note: MI state judge tests federal bankruptcy law

Detroit city limits

For municipal bankruptcy, all eyes across the nation now turn to Detroit.

The latest: Michigan Circuit Court Judge Rosemary Aquilina ordered Detroit’s bankruptcy filings be withdrawn because they violate state law guaranteeing that pensions must be paid to public employees. The bankruptcy filing seeks to reduce all city liabilities, including pensions, by 90 percent.

Reported the Detroit News:

” ‘It’s absolutely needed,’ said Judge Rosemary Aquilina, observing she hopes Gov. Rick Snyder ‘reads certain sections of the [Michigan] constitution and reconsiders his actions.’….

“ ‘It’s cheating, sir, and it’s cheating good people who work,’ the judge told assistant state Attorney General Brian Devlin. ‘It’s also not honoring the president, who took [Detroit’s auto companies] out of bankruptcy.’”

She gets wrong what happened. Federal bankruptcy court would have dealt with the Chrysler and GM bankruptcies. But President Obama and the Democratic-controlled U.S. Congress stepped in and passed bailout legislation. The two auto giants were declared “too big to fail.”

By contrast, every year a few cities across the country declare bankruptcy. Detroit’s is the biggest city bankruptcy so far because its population now is around 700,000. But not that far behind are bankrupt San Bernardino at 213,000 and Stockton at 296,000. Combined, the two California cities have 508,000 people.

Obama

If Obama intervened in Detroit, he would have to intervene across the country, setting a new precedent of the federal government bailing out cities. And if that happened, you would see dozens, maybe hundreds, of cities declaring bankruptcy as a way to get federal funds. Thousands of cities everywhere, even financially sound ones, would become even more fiscally reckless, especially on pensions, assuming that, no matter what happened, the feds would bail them out.

Such bailouts soon would amount to hundreds of billions of dollars, goosing the already immense federal debt of $16.7 trillion.

And even if the president wanted to blow billions on municipal bailouts, the U.S. House of Representatives now is controlled by Republicans who wouldn’t cooperate. As a start, they wouldn’t bail out a city that voted 98 percent Democratic in the last election. And Republicans also wouldn’t want to bail out workers whose unions continually attack Republicans, while manipulating the system to push public employee pay and benefits to unsustainable levels.

As to the GM bailout, the latest estimate was that its final cost to taxpayers will be $25 billion. Just letting the normal bankruptcy proceedings go forward would have saved that money, while still reorganizing the company, albeit on terms not as favorable to the UAW and Democratic political ambitions.

Gov. Snyder’s office is appealing Aquilina’s decision and no doubt will prevail in the state’s own circuit court, which understands federal precedence in bankruptcy cases. Even if it loses there, the bankruptcy court will decide the case.

For California, this new Detroit drama will confirm that federal bankruptcy courts can set aside state constitutional protections on pensions.

41 comments

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  1. S Moderation Douglas
    S Moderation Douglas 21 July, 2013, 09:54

    “The bankruptcy filing seeks to reduce all city liabilities, including pensions, by 90 percent”
    …………………
    These are the proposals. No one is even suggesting reducing pensions by 90 percent:

    Automatic cost-of-living raises would be eliminated,

    worker contributions into the system would rise.

     benefits would be frozen

    some would be switched to 401(k)-like defined-contribution

    http://www.bloomberg.com/news/2013-06-20/detroit-emergency-manager-orders-probe-of-benefit-programs-1-.html

    Even these proposals are just a starting point. They may be tempered by negotiations or legal decisions. 

    Reply this comment
  2. S Moderation Douglas
    S Moderation Douglas 21 July, 2013, 12:06

    The glass is at least half full.

    Reply this comment
  3. The Modified Ted Steele Methodologies (tm)
    The Modified Ted Steele Methodologies (tm) 21 July, 2013, 12:29

    Hey John would it have hurt you any to refer to the President as President Obama?

    Lame and predictable.

    Reply this comment
  4. Rex the Wonderdog!
    Rex the Wonderdog! 21 July, 2013, 15:04

    The sad part is ALL of the “bailout” money is BORROWED money, most from China and other nations, and that is absurd that the nation would borrow money to bailout a muni who engaged in a Ponzi scheme.

    I think this all started with the Wall Street bailout by Bush, that still gets me furious, that main street would bailout irresponsible financiers. It all started in 2008 with the Wall Street bailouts.

    Reply this comment
  5. Rex the Wonderdog!
    Rex the Wonderdog! 21 July, 2013, 15:04

    Hey John would it have hurt you any to refer to the President as President Obama?
    ==
    Obama hasn’t earned that respect yet, and I voted for him-once.

    Reply this comment
  6. Ted
    Ted 21 July, 2013, 15:27

    Poodle,

    When I was In the military I remember an axiomatic notion that for centuries everyone accepted, You don’t salute the man, you salute the rank. The rule was in place so every chucklehead didn’t get to pass on the fitness of every officer til it became a sort of schizoid beauty contest. Of course with racism that all goes out the window on day one does it not?

    This is merely reason 467 why republicans will remain in a place of weakness. Like the inability to pass immigration, or the push to repeal affordable care, u clowns are driving your brand into the deck,well, again. Americans are sickened by the ignorance and hate .

    Reply this comment
  7. Donkey
    Donkey 21 July, 2013, 16:34

    Teddt Steals, put down your crack pipe, no one that has posted yet is a Repuke. Just how daff are you queegy? 🙂

    Reply this comment
  8. us citizen
    us citizen 21 July, 2013, 17:47

    I hate BO……..wont even call him obama, let alone pres……wont capitalize his name either. And I dont care what you think Teddy. He deserves NO respect. He has tarnished this country. Any while Im at it…..I see you dont capitalize Republican, so whats your point.

    Reply this comment
  9. Ted
    Ted 21 July, 2013, 18:40

    Spinning them up and cutting them down.
    Lol

    Reply this comment
  10. Ted
    Ted 21 July, 2013, 18:46

    Republican, there ya go!
    You lads need lessons in civility. Among other things. Your admitted hate for the President
    Is just street racism , sorry man. I was against Prrsident Bush but I treat him
    With respect, grow up and have some class .

    Reply this comment
  11. Richard Rider
    Richard Rider 21 July, 2013, 20:08

    Ted, remind us all how respectful the Democrats were of George Bush II. Maybe my memory is faulty on this.

    Reply this comment
  12. Ulysses Uhaul
    Ulysses Uhaul 21 July, 2013, 20:12

    Mean spirited doomers….have no shame….shucks! So shocked.

    Reply this comment
  13. Richard Rider
    Richard Rider 21 July, 2013, 20:12

    Ted, the proper deference due by military to the President has to do with the fact that they work for (and must be willing to die for) their commander in chief. The rest of us are free to call an asshole an asshole. Seems you have zero knowledge of our country’s long, rich history of disrespecting our Presidents.

    You really are an ignorant fool. Thanks for demonstrating that fact here (once again).

    Reply this comment
  14. Ted
    Ted 21 July, 2013, 20:15

    Dick– I said I was respectful. Are you going to defend disrespect
    To the President because someone else did it first? Are you nine?

    Reply this comment
  15. Ted
    Ted 21 July, 2013, 20:29

    Dick,
    I can see that u don’t read for comprehension or maybe you’re not
    Good with abstract thought. I was not explaining the military chain of command
    Little buddy but using an old military axiom as an analog to illustrate the concept
    Of respect for the office. Are u saying that because some Dems disrespected Pres. Bush, your guy,
    That now u can do the same to the next guy? Are you nine?

    Reply this comment
  16. Rex the Wonderdog!
    Rex the Wonderdog! 21 July, 2013, 20:42

    Ted melting down!! Good job RR 🙂

    Reply this comment
  17. Ulysses Uhaul
    Ulysses Uhaul 21 July, 2013, 23:36

    Attacking Teddy is futile…..he is the sage of CWD not a half wit doomer loser who whines at election loss after election loss…spare us…..you got forks in you…WELL DONE!

    Reply this comment
  18. Dyspeptic
    Dyspeptic 21 July, 2013, 23:55

    “Hey John would it have hurt you any to refer to the President as President Obama? Lame and predictable.”

    Hey Ted, would it have hurt you to get your sycophantic pie hole off The Demagogue In Chiefs rear end? Lame and predictable.

    So who does this partisan hack state judge think she is. She sounds as clueless and sycophantic as Teddy and Uhaul. Apparently the only qualifications for being a Democrat nominee for a judgeship is a room temperature IQ, a partisan mentality and complete contempt for taxpayers.

    Don’t forget Uhaul – always restock the sanitary seat covers in the restroom and check the toilet paper and hand towel supply too. You can easily be replaced by an illegal so stay on your toes.

    Reply this comment
  19. The Modified Ted Steele Methodologies (tm)
    The Modified Ted Steele Methodologies (tm) 22 July, 2013, 06:51

    Dysphoric–
    So in your world respect equals sychophant?

    You are indeed
    Dysphoric.

    Reply this comment
  20. Ulysses Uhaul
    Ulysses Uhaul 22 July, 2013, 08:32

    Teddy…ignore Dys….he appears unbalanced and off his meds….or does he have Randsburg heat stroke….poor sot…..go light on the lad….

    Reply this comment
  21. Steele, Ted, When only the very best will do!
    Steele, Ted, When only the very best will do! 22 July, 2013, 08:42

    I try to—-but he is such an easy padantic target!

    Reply this comment
  22. Hondo
    Hondo 22 July, 2013, 08:53

    How bout we talk about the issues instead of calling each other names.
    This just what the dems want, is to change the subject from Detroit. Suddenly this whole comment section is about how we should respect the Pres. Teddy has done a brilliant job of changing the subject. The the conservative above have fallen for it, too.
    Detroit looks like it was hit with an atomic bomb. The pics of Hiroshima and Detroit now, makes you wonder who actually won ww2. There were no Republicans in the food chain that ate detroit. 50 years of totall dem gov is the nuclear weapon that destroyed Detroit.
    Hondo…

    Reply this comment
  23. Steele, Ted, When only the very best will do!
    Steele, Ted, When only the very best will do! 22 July, 2013, 09:02

    Honda—Great idea to stop the name calling and just exchange ideas. The challange of course is to do it with civility, no?

    The constant barage of obvious disrespect to the President (by the way the oleader of the “Dems”) does not help. Its fun though to smoke out the many folks out here who actually admit “hatred” for the man (see above posts from YOUR colleagues). This obviously drives the child like ultra right fervor that forces them to treat him like a second class person. Sound familiar? Our nation did alot of that in the South in the last century.

    Reply this comment
  24. Ulysses Uhaul
    Ulysses Uhaul 22 July, 2013, 10:24

    Hondo…you are the issue….people like you thrive on confrontation….you came to the right place…..serving up Hondo as we discourse!

    Reply this comment
  25. Ulysses Uhaul
    Ulysses Uhaul 22 July, 2013, 10:33

    Hondo…what are your life goals? Have you improved your lot in the past five years? Why are you so miserable? Why iare CWD provocative articles so emtionally important to you knowing these writers are merely futile red meat hurlers getting paid to rile up unstable citizens.

    Reply this comment
  26. Steele, Ted, When only the very best will do!
    Steele, Ted, When only the very best will do! 22 July, 2013, 10:55

    …futile red meat hurlers…..

    oh
    my

    Reply this comment
  27. jimmydeeoc
    jimmydeeoc 22 July, 2013, 15:01

    Didya hear? Teddy broke his nose!

    Obama sat down.

    Reply this comment
  28. Rex the Wonderdog!
    Rex the Wonderdog! 22 July, 2013, 15:56

    Didya hear? Teddy broke his nose! Obama sat down.
    ==
    🙂

    Reply this comment
  29. Ulysses Uhaul
    Ulysses Uhaul 22 July, 2013, 17:49

    The usual loons checked in….so sad and troll-like. Why are you so crass and surly…..oh…my!

    Reply this comment
  30. Ted Steele, The Decider
    Ted Steele, The Decider 23 July, 2013, 13:49

    LOL–There doing the best they can Uhaul—- Pretty certain they had pretty strange upbringings to be so disrespectful and doom-like. There is not a patriot among em! If this was the revolution they would clearly all have been loyalists!

    Reply this comment
  31. Ted Steele, The Decider
    Ted Steele, The Decider 23 July, 2013, 13:50

    Hey— John—- The Ted System ™ likes the new look!

    Reply this comment
  32. Rex the Wonderdog!
    Rex the Wonderdog! 23 July, 2013, 19:52

    Yes, new format is cool!.. except the comment font are not as dark as before….

    Reply this comment
  33. Rex the Wonderdog!
    Rex the Wonderdog! 23 July, 2013, 19:53

    Teddy, how’s your nose feeling, after Obama sat on it 🙂

    Reply this comment
  34. queeg
    queeg 23 July, 2013, 23:12

    Poodle grow up……your very disrepectful of posters…..no ideas…..just personal attacks….sick

    Reply this comment
  35. SeeSaw
    SeeSaw 24 July, 2013, 00:46

    You should always, “salute” the Commander in Chief.

    Reply this comment
  36. Rex the Wonderdog!
    Rex the Wonderdog! 24 July, 2013, 01:11

    seesaw, pipe down, if we want any lip off of granny we will go to the old foggies rest home 😉

    Reply this comment
  37. Rex the Wonderdog!
    Rex the Wonderdog! 24 July, 2013, 01:12

    OK why is it July 23, @ 6:11PM PDT and the comment posting time says July 24 @ 1:11AM???

    Reply this comment
  38. Ted Steele, The Decider
    Ted Steele, The Decider 24 July, 2013, 01:45

    comments about race, people’s age, jobs….the Poodle never makes a substantive point– just more troll like conduct…..and he LOVES this attention– even this post!!!

    There ya go Poodle– hurry! type now!

    Reply this comment
  39. queeg
    queeg 24 July, 2013, 06:13

    Teddy…..so shocked such trash is allowed on reputable site like CWD.

    Reply this comment

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