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Friday, March 26, 2010

Rep. Cushingberry sponsors House Bill 5976 to rescue the City of Detroit's pension system.

The Friends of George Cushingberry Jr.
March 27, 2010

House Bill 5976 is known as the distressed municipal pension system act. This legislation will protect employee’s pensions by allowing pension managers to apply to the State of Michigan for assistance if the transaction goes into a negative status. When this situation comes into effect, a financial management team from State of Michigan would monitor the loan until paid off. This bill would be the Donald Trump moment for the current pension board whose performance in office is a total disgrace to all principles of Managerial Accounting methods and procedures. The current members would be replaced and a new management team would take over.

The City of Detroit Employees pension system is currently being supported by credit default swaps, a financing shell game that was implemented during the Kilpatrick administration. Credit default swaps are transactions that are similar to a bet at Motor City Casino or your favorite team. If your $100.00 investment makes %10 you gain $10.00 dollars for a total of $110.00 dollars. If the investment loses %10 you lost $10.00 and now have $90.00. You get the drift now and, given the current status of the financial industry, the pension fund for the city is exposed to greater financial harm.

The damage that credit default swaps create is evident when you walk down any street in the City of Detroit these days. In last ten years empty buildings and homes are the new face of the neighborhood. The rapid urban decay of the city is due to the abuse and criminal behavior of financial managers and government co-operation at the highest level of previous administrations at Federal and local levels.

According to information provided by the Detroit Free Press under the Freedom of Information Act, the current pension board lacked the oversight and investigation from neutral parties such as the Auditor General and other government agencies. There is currently a severe lack of transparency in the system at the moment.

Does the city have an additional $350,000 to support the current system from the property tax base to eliminate this credit default swap status?

Like the great stateswoman Wanda Sykes would say if she was sitting in Baker’s Keyboard Lounge one night “I want a receipt”. This bill if it became law would allow a citizen to generate that receipt by accessing the city website. That receipt would be generated in real time and displayed on your blackberry, cell phone and the screens of local radio station talk show hosts. Radio personalities like Mildred Gaddis (WCHB 1200 AM) and Frankie Darcell (WMXD 92.3 FM) would have access to the same information in real time.

As for the soon to be former employees of the board, when one door of opportunity closes, another one will open up or, will close behind them for a few years. They may possibly join the line of incarcerated city officials like Alonzo Bates, and Kwame Kilpatrick. However all hope is not lost because like Michael Vick and Martha Stewart, they will prosper after they serve their time.

Mayor Bing and his financial advisors feel that this legislation would serve as a life vest for the system protecting current and retired City employees from further financial damage and bureaucratic mismanagement. Deputy Mayor Saul Green has reviewed the current situation from a legal perspective. The “City has few choices and this is the best option to take for the financial safety and integrity of the fund”. If Mr. Green was in his old job as a federal prosecutor, some of these people would be in jail already. The bill is in line with the Obama administration’s policy to put more transparency in government by promoting the use of technology in all accounting matters.

If you would like to give us comment on this legislation feel free to use our blog. These comments are compiled and reviewed by Rep. Cushingberry’s staff.

Contact Information:
State Rep. George Cushingberry Jr.


1 comment:

Linda Giles-Shieldbearer said...

As a Detroit public school teacher, I understand the concerns about misuse of funds. However, explain to me how putting the fund into the hands of a private firm that's currently operating with 80% while the current board is operating with 100% available funds is any better? Where is the money? If the Auditor General should have been overseeing the board, whose goof up was this? Benedict Arnold betrayed the entire nation. Did we just learn about him yesterday?! - Good Stuff on the Internet