Business leaders step up in Detroit
The Detroit News ran a fascinating editorial on Tuesday about the arrival of Emergency Manager Kevyn Orr, an accomplished bankruptcy manager assigned by the state of Michigan to spend the next eighteen months cleaning up that tortured, misgoverned city. The people who killed Detroit showed up to protest Orr’s arrival, but there were only about 150 of them, and little attention was paid to their antics:
Most city residents ignored the ministers who used their pulpits to raise the fervor against the state takeover, and also paid scant attention to ill-informed outside agitators such as the Rev. Jesse Jackson and TV host Rachel Maddow, who are ranting incessantly about the loss of democracy.
Instead, Detroiters appear to be willing to give Orr a chance to show what he can achieve before they react. Or they simply are resigned to the inevitable. Or they prefer any option to the failed status quo.
They got their first look at what the city’s turnaround may yield Monday — as Orr was settling in to his new City Hall office — when Mayor Dave Bing detailed a plan by the business community to help equip the Emergency Medical Services and police departments with new vehicles.
Led by mega-mogul Roger Penske, Detroit’s Big Three automakers and other business leaders and foundations, the initiative will raise $8 million in private funds to lease 23 new EMS vehicles and 100 police cruisers. Another $6 million is promised for recreation programs, with $5 million of that money coming from Lear Corp. and $1 million from DTE Energy Co.
It’s an enormous private sector commitment that should help address the No. 1 concern of Detroiters — public safety.
Imagine that! Private sector businessmen stepping up to help their city, now that they’re confident they won’t just be dropping money into the pockets of degenerate kleptocrats. The little band of protesters rallied by the likes of Maddow and Jesse Jackson (whose family knows a few things about corruption) are howling about the loss of “democracy,” but maybe this is the only way to dismantle rotting big-city political machines: let them prove their abject failure beyond question by crashing the city, use professional management to clean up the wreckage, and hope voters observing the process will have second thoughts about following political charlatans into ruin. Warning: this process will be several orders of magnitude more unpleasant, if run at the national level.
By the way, that’s Orr in the image above. It shouldn’t matter what he looks like, but let us not kid ourselves, it does.
A previous article in the Detroit News described an $11,600 tax lien on his Maryland home as a stain on “what colleagues say has been an otherwise distinguished career as a bankruptcy attorney and corporate turnaround specialist.” The tax liens mostly stemmed from his failure to pay unemployment taxes for his babysitter. The remainder of his resume is impressive:
Orr, 54, has some familiarity with the Motor City, having handled Chrysler LLC’s bankruptcy in 2009. He was the lead attorney who convinced a court to allow Chrysler to abruptly shut down 789 dealerships, a controversial decision at the time.
“He was sensitive and appreciative of the issues that he was litigating in those matters,” said Arthur J. Gonzalez, the retired bankruptcy judge who handled the Chrysler case.
[...] Orr has a 30-year career in bankruptcy law, business restructuring, commercial litigation and bank regulation. In discussing Detroit’s financial problems, Orr has said he is most comfortable in bankruptcy court, where municipalities are favored over bondholders, but he’d like to avoid that route.
After graduating from the U-M’s Law School in 1983, Orr first worked in private practice at a Miami firm.
He later moved to Washington, D.C., and worked for the federal government, first as a litigator for the Federal Deposit Insurance Corp. and later as an attorney for the Resolution Trust Corp., a government-created entity from the savings and loan crisis of the late 1980s.
He also earned high marks working as deputy director of the Justice Department’s U.S. Trustees Program in the late 90s.
Orr has his work cut out for him, and limited tools for accomplishing the job. Detroit is running a $327 million budget deficit, plus $14 billion in long-term debt. The Washington Post described Orr’s formal powers as follows: “State law allows emergency managers to negotiate labor contracts and deals with vendors. He can sell off city assets to raise money and cut the salaries of elected officials to save bucks. In some cities with emergency managers, elected leaders have been moved out of decisions involving municipal finances.”
It will be enormously helpful if Orr can augment these limited formal powers with arrangements such as the business community’s support for police and emergency medical services. He sounds both cheerful and confident, saying of his job in a recent interview, “If it doesn’t kill me, it’s going to make me stronger.” Isn’t that pretty much the message Detroit and its automakers have been striving to convey through their advertising and public-relations efforts? It sounds like the city and its emergency manager are on the same page, at least for now.