Is Detroit’s New Emergency Financial Manager Kevyn Orr A Patsy?

MI Governor Snyder Is Either An Inept Leader Or A Master Of The Machiavellian Arts

 

Noun     1. patsy – a person who is gullible and easy to take advantage of – a chump, a person who is tricked or swindled, a fall guy, gull, soft touch, sucker, mug, fool, mark, dupe, victim 

 

Okay, I admit, I don’t have a business degree from Harvard, Yale or even Wharton Business School but I do know how to spot when someone is being set up as a fall guy or as the mob guys in Brooklyn call a patsy. It’s pretty evident that Michigan Governor Rick Snyder and the rest of the GOP funky bunch is setting Detroit’s new Emergency Financial Manager up to be the fall guy for some type of WASPish Machiavellian endeavor they have up their sleeve for next year’s election. Conventional wisdom would suggest that if Kevyn Orr is sent back to Washington DC in 18 months suffering from the agony of defeat it would reflect negatively on Rick Snyder and his re-election as governor.   But what if the GOP puppet masters purposely brought Kevyn Orr in because they knew he would not succeed?

T-shirt depicting Michigan's self proclaimed "One Tough Nerd", Governor Rick Snyder

T-shirt depicting Michigan’s self proclaimed “One Tough Nerd”, Governor Rick Snyder

I know, you think I’ve drank from the Alex Jones Conspiracy Theory Kool-Aid dispenser but lets look at what has happened thus far in this whole saga of Michigan’s take over of the City of Detroit.   Orr also won’t do whats truly needed because it’s either a conflict of interest or because the Governor won’t want to jeopardize his future as a venture capitalist.

The state hired Kevyn Orr to get Detroit’s finances in order but has problems paying his own taxes on time.  Synder and Orr looked totally dumbfounded when Chad Livengood from the Detroit News approached the two of them about it at the press conference announcing Orr’s appointment as Emergency Financial Manager.  For the next three days, the Governor’s office scrambled to do damage control with Orr openly denying he was “a tax cheat”.  Finally, after media scrutiny into his personal life and the business dealings of his former law firm, Jones Day, the tax bills are paid to the state of Maryland.

There are also questions about Kevyn Orr no one seems to be asking.  At the initial press conference and the proceeding media interviews, Orr said, “Anyone who thinks I’m a tax cheat, by no stretch of the imagination could they even imagine how much tax I pay each year,” said Orr, adding that 45 percent of his income goes to taxes paid in multiple states and countries.”

This statement is important because it implies that if Orr is has to pay income taxes overseas, he’s is a high powered attorney who represents deep pocketed international clients.  This is important because what most people in Michigan don’t seem to grasp with their blue collar mindset is that lawyers like this are not cheap.  They are very expensive even by New York or Washington DC standards.  Attorneys that practice in specialty fields like corporate restructuring usually get an hourly rate of between $450-$500 an hour especially through a firm like Jones Day that specialize in international corporate finance.

So that leads to the question of why is Kevyn Orr uprooting his family from the posh neighborhoods of Bethesda, Maryland and moving them to Detroit at a K-Mart blue light special price of $140 an hour for 18 months? Orr says it because Detroit “is the Olympics of restructuring.”

So Orr claims he is doing this for the glory because he thinks he is going to be hailed as a hero in financial geekdom like this was ABC’s Wide World of Sports.  I’m sorry but I’m having a hard time believing the spin being fed to the media.

MFI-Miami deals with countless attorneys that range in talent from Lionel Hutz to Gerry Spence and I can tell you that with the higher skill level of the attorney there is the less of a likelihood that they would be willing to take on a case for “the glory” especially one like Detroit which as they say in the military, is TARFU.

It’s also odd that the first person he officially hires as EFM is GOP spin doctor and Michigan GOP insider, Bill Nowling.  Nowling served as communications director for Rick Snyder’s gubernatorial campaign and transition team in 2010.   Nowling was also a spokesman for state Senate Majority Leader Ken Sikkema (2001-04) and was a speechwriter for former Gov. John Engler.

Detroit has $9 Billion in long term debt to bond holders. Nearly 50% of this debt is due to the City of Detroit being a victim LIBOR rigging by Union Bank of Switzerland (UBS) and UBS conning the city’s financial managers into using complex derivatives which basically set the City of Detroit up to fail.

In December 2012, UBS admitted to participating in a scheme to manipulate the London Interbank Offered Rate or LIBOR Interest rate.  LIBOR is the interest rate used in most sub-prime residential mortgage loans like the ones that were sold to about 80% of Detroit homeowners during the real estate boom and municipal bonds.  UBS agreed to pay $1.505 billion to the US Department of Justice, the U.S. Commodity Futures Trading Commission, the UK Financial Services and the Swiss Financial Market Supervisory Authority for colluding with other banks  by making 2000 written requests for rate movements from January of 2005 to June of 2010.

Under normal situations, the City of Detroit could easily use the threat of litigation to negotiate this $9 Billion debt down to $3 or $4 Billion, like other cities did at the beginning of the financial crisis.  After all, as a bank do you want be known internationally that you ripped off a city that once saved Europe from being enslaved by the Nazis?

Unfortunately, these are not ordinary times.   Three days before Kevyn Orr was appointed Emergency Financial Manager by the state of Michigan, the City of Detroit under pressure from rick Snyder hired his former employer, Jones Day  to represent them in it’s restructuring.  Jones Day also represents JPMorgan Chase, Bank of America and UBS.  The three banks involved in structuring at least nearly a dozen bond sales for the City of Detroit since 2005.  This means if the city wants to sue these banks for fraud and other issues revolving around the rigging of the LIBOR Index, they will have to hire another law firm to represent them.

Unfortunately, now that Detroit is under the dictatorship of Kevyn Orr, filing a suit against the banks to reduce that $9 billion debt probably isn’t going to happen due to the fact that when the curtain closes on this blue collar Shakespearean financial drama, Snyder, Dillon and Orr will be heading back to the world of high high finance and will and need to do business with these same banks that essentially financially raped a vulnerable Detroit.

One issue that everyone in Lansing and even Orr himself seems to be evading is how Detroit is going to get the capital it needs to improve it’s infrastructure and ailing school system.

The reality is Detroit can cut its basic services, health care, pensions all it wants to save money but as any novice player of Sim City can tell you, Detroit needs capital and a continual stream of revenue to make it a living, breathing and viable city.

Detroit needs immediate cash not only for essential city services like public transportation, police and fire protection but it desperately needs to rebuild it’s crumbling economic  infrastructure.  All of these are essential to make the Detroit Renaissance that we have been hearing about for over 40 years a reality.

So if Orr can’t do or won’t do what needs to be done to save the city, then why was hired?  Now you know why I think he’s being set up as Snyder’s patsy or is Snyder the middleman for Dick DeVos and his friends at the Ayn Rand Fan Club aka The Mackinac Center for Public Policy?

 

Comments

  1. TurboTax Timmy Geithner that helped with TARP and the other Bankster gang banking rape of places including Detroit didn’t seem to have a problem just because HE cheated on his taxes. 4/15 is close but we have short memories.

  2. http://www.jonesday.com/offices2/locations.aspx

    Get your Facts Straight. Jones Day is NOT a Small Firm. And Partners, such as Kevyn Orr, Bill out at over a Thousand Dollars an Hour. The City of Detroit is getting a tremendous discount.
    They Have Offices in 19 Countries with 37 offices and more than 2,400 Attorneys, plus 800 Partners.

    In Fact, Jones Day is the Largest Law Firm in the United States.

    Furthermore,

    Detroit is NOT 9 Billion in Debt as you mentioned in your Article. It is $18 Billion in Debt.

    Also, maybe you should read thought this before passing Judgement on Detroit, Governor Rick Snyder’s Decision, and Kevyn Orr. They did not create this problem, 50 years of Piss Poor Management Run by Democrats has.

    http://www.freep.com/assets/freep/pdf/C4206913614.PDF

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