Detroit, which will soon receive the title of “one of the biggest municipal bankruptcy cases in American history”, is currently struggling to make the interest payment of $39.7 million upon the borrowing of $1.44 billion in the public bond market. Excess payments were made up to $100 million, which is a disastrous amount to the city, and had cost the city nearly $2 billion over 23 years. Several approaches have been debatable to tackle this issue; suing the pension fund for the unjustly extraction of money from the bond market and a “clawback” from citizens whom received more than they should have, which may impose a practical problem of severing the financial condition.
Personally, I feel that Detroit should not penalize their citizens by pulling back on the pensions given out, as it is their mismanagement of approving nearly every pension payment regardless of their eligibilities. Furthermore, the amount of “excess payments” that claim to have made was not publicly disclosed, thus failing to prove that retirees were actually given more than they should receive.
On a different context, I would like to categorize this incident as a “fraud” made by the trustees of the pension fund, as it is unethical to extract money from the public bond market and burden the taxpayers to replenish this hole. Perhaps Detroit had the benefit of doubt of maintaining competent employers through the offer of pensions however brought upon the unappealing title of “one of the biggest bankruptcy in American history”.
https://www.youtube.com/watch?v=OuBxNJ9wbCk
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