In what could have been the “Bankruptcy Combined” event, a team of academics, researchers, lawyers and municipal finance experts broke down and analyzed some of Detroit’s bankruptcy issues in a Tuesday event that’s now available in on-demand replays.
If you’re a fan of privatization and data-driven decisionmaking, you’re a teammate of the presenters, drafted by the American Enterprise Institute in Washington D.C.
If you’re an unwavering union supporter or waving the flag of home rule, this team is going to raise your blood pressure.
Pensions, bonds, private-public partnerships, patterns of urban de-population and housing devaluation: All were explored in the two-hour session. Presenters reiterated the national implications of Detroit’s situation of declining population and revenue and lack of restructured services, operations and debt obligations.
“One reason it’s so important is because there area bunch of other cities that are in the same predicament,” says David Skeel, professor of corporate law at University of Pennsylvania and one of the presenters. To Skeel, it’s “pretty clear” the pensions will be restructured in Detroit’s post-bankruptcy plans.
The mere possibility that Detroit could default on municipal bonds defies history, according to John Mousseau, executive vice president and director of fixed income and a municipal bond portfolio manager at Cumberland Advisors in Sarasota, Fla. Less than one half of one percent of bonds have defaulted in the history of municipal markets, according to Mousseau. So the discussion about Detroit’s restructuring of its bond obligations means “we’re more or less in uncharted territory,” Mousseau says.
Other panelists were Michael Barone, senior political analyst for The Washington Examiner and a resident fellow at AEI, R. Richard Geddes, associate professor in the department of policy analysis and management at Cornell University, and Andrew Biggs, resident scholar at AEI.
The entire two-hour event is available at http://www.aei.org/events/2014/02/18/the-detroit-bankruptcy-conflicts-and-implications/
-By WDET’s Sandra Svoboda
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