WASHINGTON (Reuters) - U.S. securities regulators on Wednesday charged the former Detroit mayor and treasurer along with the city's public pension investment adviser with devising a secret exchange of "lavish gifts" to influence the pension fund's investments.
In 2006, businessman Robert Shumake asked trustees of Detroit’s two pensions to hand him US$27-million to invest in real estate.
George Orzech, a fire battalion chief who still represents uniformed workers on their fund’s board, found one thing odd:
“Anybody who knows the first names of trustees in a first meeting has already had meetings with people,” said Orzech, who unsuccessfully opposed the plan. “It was a political deal.”
This Real News Network interview with INET executive director and political insider Rob Johnson focuses on what he calls “ugly money politics” which for the most part means the role of finance in state and local elections. He points out how the trigger of Detroit’s bankruptcy was an over $300 million derivatives payment triggered by a ratings downgrade of the city. Oh, and the city manager who approved that deal took a job with the firm that profited from this toxic trade.
Emergency Manager Kevyn Orr’s plan to suspend payments on US$2-billion of Detroit’s debt threatens a basic tenet of the US$3.7-trillion municipal market: that states and cities will raise taxes as high as needed to avoid default.
Highland Park, Michigan is on the brink of bankruptcy. There is no other realistic way out of the fiscal mess the city is in. As is typically the case, public union pensions are at the heart of the problem. Michigan Live reports Highland Park pensions in jeopardy if Fifth Third Bank halts loan payments.
Chicago's image as 'city that works' threatened by looming pension crisis CHICAGO (AP) — It's not the vision of a world-class city that Chicago Mayor Rahm Emanuel typically likes to portray. More teachers losing their jobs, thousands fewer police and firefighters on duty, less frequent trash collection and miles of potholed roads going unrepaired — all as property taxes soar.
New York Mayor Michael Bloomberg invoked Detroit’s bankruptcy to recall the most populous U.S. city’s own brush with insolvency and warn its residents that they shouldn’t take the current fiscal well-being for granted.
Reuters - Securities regulators charged an Illinois-based investment adviser on Wednesday with using LinkedIn and other social media networking websites to lure investors by offering more than $500 billion in fake securities.