As the stock market continues to fill the pockets of hedge fund managers and CEO’s, the echoes of 2008 are fading from memory. The litany of “too big to fail,” it would seem, has served its purpose.
Two of the few legitimate successes from the TARP bailout are Detroit’s General Motors and Chrysler, both of which have repaid their respective loans of $13.4 and $4 billion and survived the Great Recession intact.
How ironic that the Motor City, which nurtured these economic giants throughout much of the last century, has itself failed.
Last Tuesday in federal court, Judge Steven W. Rhodes ruled that Detroit could shed billions in debt in the largest public bankruptcy in U.S. history. Motown, a “once proud and prosperous city,” according to Rhodes, is insolvent.
So what makes this bankruptcy different from so many of the countless Chapter 9’s which have shuttered storefronts and offices throughout the country?
This difference is lost somewhere in the reams of spreadsheets recording Detroit’s debtors. There one would find the pensions promised to the 8,500 police officers and firefighters who retired after a career spent patrolling its perilous streets and responding to its many emergencies (NY times 12/3).
(Add to that number the more than 15,000 additional city workers existing on an average pension of $20,000 per year, and the cataclysmic issues facing the city’s emergency manager, Kevyn Orr, come into focus.)
Among those likely to be affected by bankruptcy negotiations include cops who endured the violent upheaval of the ’60s, including the riot of 1967, and many more who witnessed the rise of criminal street gangs that made Detroit one of America’s most dangerous cities. Also targeted are the pensions for veteran firefighters who fought the city’s infamous “Devil’s Night” fires set by arsonists between the ’70s and the ’90s.
Compare their plight with those sitting atop the TARP-fortified pyramid. According to CNN, Brian Moynihan, CEO of Bank of America, was paid a salary of $12 million dollars last year, while CEO Michael Corbat of Citigroup collected $11.5 million. Both of their companies received $45 billion in federal funds.
Admittedly, a career in law enforcement or firefighting does not promise wealth. One of the few benefits of the public system, however, is the presumed security of its pensions. Yet the same federal court system which administered the transfer of billions of taxpayer dollars to the coffers of private corporations has chosen to ignore the welfare of the men and women who spent their careers putting their lives on the line.
This level of economic disparity is just the type of lopsided nonsense that sparked the Occupy Wall Street demonstrations (though Moynihan and Corbat might sniff at being included in the lowly 1% club).
This is not to suggest that the TARP bailout was unnecessary. Many economists have concluded that the federal government’s actions succeeded in preserving the current financial system. But were not those corporations which received such a monumental amount of our money responsible for the collapse of the system itself?
The real question is this: Does the federal government consider the promise of a pension to those men and women who kept their oath and protected Detroit’s citizens to be an insignificant line item on a spreadsheet?