Tuesday, July 30, 2013

Why Obama let Detroit (city) go bankrupt

In June 2009 a team of Jones Day lawyers, including Kevyn Orr, defended Chrysler in federal court against some 100,000 Indiana teacher and police pensioners. They were suing the bankrupt Detroit company claiming its offer of just 29 cents for their secured bonds was illegal. The pensioners’ Chrysler investment was part of their retirement income, yet their lawsuit — filed by Indiana’s treasurer — received little media attention and no sympathy from Washington Democrats or the Obama administration. Bankruptcy Judge Arthur Gonzalez quickly dismissed the suit, saying the public employee pensions were less important than saving Chrysler and the economy from harm.
While public employee unions suffered, however, their auto worker cousins in the Chrysler (and GM bailouts) got preferential treatment, with President Obama’s auto task force giving the UAW significant ownership of the two companies and full funding of their pensions.
Fast forward to 2013 and once again a bankrupt Detroit, this time the municipality, is making headlines as now-Emergency Manager Kevyn Orr is under siege from public employee unions and union-bound politicians demanding Washington intervention. Barack Obama, however, is nowhere to be found. He has, to quote the infamous Mitt Romney column that Obama exploited to win reelection in 2012, “let Detroit go bankrupt.”

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