Is Detroit’s Bankruptcy Really a Feeding Frenzy for Privatization?
Frank Hammer: Retirees, workers, and blacks will lose big as banks look to profit from debt collection and the privatization of one of America’s largest cities
JESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network. I’m Jessica Desvarieux in Baltimore.
On Thursday, the City of Detroit filed for Chapter 9 bankruptcy, making it the largest city in U.S. history to file for bankruptcy. One-quarter of Detroit’s population has left since 2000, roughly the same number of vacant housing units, and the common refrain that we hear is that Detroit’s problems were decades in the making.
Now joining us to unpack all this is Frank Hammer. Frank is a retired GM employee of 32 years. He is the former president of the United Auto Workers Local 909 and also worked in the GM Department of United Auto Workers. He currently is a labor organizer at School of the Americas Watch.
Thanks for joining us, Frank.
FRANK HAMMER, COFOUNDER, AUTOWORKER CARAVAN: Thank you for having me.
DESVARIEUX: So, Frank, let’s talk about the root issues here. It didn’t happen overnight. We sort of knew this was coming. What would you say are the main causes as to why Detroit had to file for bankruptcy?
HAMMER: Well, it’s been interesting to me that the governor and other folks here in Michigan have identified the crisis as coming, as being 60 years in the making. So if you go back 60 years, you’re right smack in the middle of the ’50s. And, in fact, it was during the ’50s that we began to see the building of an interstate highway system. And that is the time when jobs began to first leave Detroit and go into the suburbs, enabled by the highway system. So I think it’s been–the papers described it as deindustrialization. It really talks about the loss of manufacturing jobs in the city over a long period of time. And naturally, with jobs leaving, people leave, and it’s no surprise that 200,000 people left the city of Detroit in the first decade of this century.
DESVARIEUX: Let’s talk about the people who actually stayed. Detroit is a city where 85 percent of the population is black. And now we’re looking at the city being bankrupt. A lot of public pensioners, people who were in the system, now who have retired, what do you expect happening to their pensions and their futures?
HAMMER: Well, the city workers–and I think there’s 20,000 retirees who, you know, worked with the city under union contracts and who now are being told that their lifelong work, which was to result in pensions, is not going to happen, that the pensions are going to be diminished, that possibly they’re going to lose all their health care. And this is their answer, that is to say, the elites of the state, it’s their answer for basically making sure that the banks are going to get paid and it’s going to be done at the expense of the workers who maintain and ran this city.
DESVARIEUX: Is there any idea of what kind of model this bankruptcy’s going to take? Is it going to be similar to these corporate bankruptcies where they just say, hey, we defaulted, and all our debt owed we’re going to sort of get a pass on it? What do you see as happening in the future here?
HAMMER: What I understand is that the state, Governor Snyder, and the city manager appointed–some of us prefer to call him dictator–is filing a Chapter 9 bankruptcy, which they’re predicting will take years, ’cause it’s quite unlike the bankruptcy restructuring that we saw as GM employees and the Chrysler employees, which was done practically in 60 days. So this is going to be a very, very drawn-out affair, and there’s going to be a lot of attorneys that are going to make a lot of money off the mishaps of what’s happening to our city.
I’m hearing, you know, cents on the dollar for unsecured creditors creditors, but I see most of the damage being inflicted on our labor unions, on our city workers, and on the assets of our city. There have been a lot of conversations under the emergency manager, and certainly now under bankruptcy, about all the city assets that can be put up in a fire sale to help the city, supposedly to help the city pay off their debts. So they’re talking about, for example, selling what’s a very cherished public park in the middle of the Detroit River called the Belle Isle. They’re talking about selling that. They’re talking about selling the art collection that’s housed [incompr.] Detroit Institute of Art, which is apparently worth millions, and so that they’re going to just have a feeding frenzy privatizing what previously were understood to be public assets. And that’s partly what I see coming down the pipe.
DESVARIEUX: Okay. And you mentioned before that a lot of these retirees that could be stiffed of their pensions and health care and things of that nature–. But bankers will be making money, because they over the past decade or so have been loaning a lot of money to Detroit. According to Bloomberg News, $0.38 of every tax dollar goes to servicing debt in Detroit. This is expected to increase to over $0.60 in the coming years. What do you make of all this, Frank? How can a government justify paying banks when they have public servants that won’t be able to receive health care and benefits that were promised to them?
HAMMER: Well, I think it speaks to our general lack of democracy. And it was manifest when this emergency manager was appointed over not only Detroit, but other cities as well. And when the public in the state of Michigan voted to not have an emergency manager and overthrew the law, the governor in the legislature during their special session at the end of last year reimposed it.
So it seems that this is the way that–it’s kind of a bit like the shock doctrine that the banks are going to make out. They’re going to get paid. Kevyn Orr, who comes out of a financial institution, Jones Day, will make sure that he’s going to take care of his fellow financial, you know, empire and that it’s going to come at the expense of working-class people pretty much in the same way that the bailout of GM and Chrysler was done on the backs of the workers. That’s what’s happening. That’s what’s going to happen in the city of Detroit.
DESVARIEUX: And we can’t ignore the racial undertones in all this. As I mentioned before, Detroit is a 85 percent black city. Can you talk a little bit about how this is going to cross color lines as well?
HAMMER: Yeah. What I see happening is that during the bankruptcy restructuring of auto, the common refrain was, you know, it was the workers who were to blame and their unions, and it was a sign to give unions and workers, you know, a real shave–or a haircut is what they like to describe it as. Well, in this case we’re talking about a black city, a black city that’s had a black political establishment. And this is now being directed–many people believe that because it has been framed in a racist manner, that somehow the city of Detroit had this coming for the mismanagement and corruption and so on.
Well, the underlying causes have really very little to do with corruption. Perhaps what was happening is that during corrupt practices of the prior mayor, for example, they were not looking at what was happening to the debt that was being accumulated with the banks, and the banks were very happy to do this. So I think the racism in it is that the city of Detroit and the residents are being blamed for a crisis that was generated by the banks.
DESVARIEUX: Okay. Thanks so much for joining us, Frank.
HAMMER: Thank you.
DESVARIEUX: And thank you for joining us on The Real News Network.
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