Detroit Bankruptcy Plan Could Slash Pensions by 34 Percent

Detroit city employees and retirees face losing up to 34% of their promised pension benefits under the city’s bankruptcy plan filed in court Friday.
The proposal comes seven months after the city sought bankruptcy court protection in an effort to shed nearly $10 billion in debt.

The plan proposes deep cuts in the health care coverage for retirees. And there could be even deeper cuts in what the city is offering to pay banks and other investors holding the city’s debt. A summary of the plan on the city’s Web site said bondholders would get new securities worth 20% of amount they are still owed.
The plan is still a long way from winning approval of the court and makes some assumptions that cash the city does not yet have will be available. For example, it is counting on the city getting more than $800 million from a group of private foundations and the state of Michigan to keep the city’s museum from having to sell off its art to pay creditors.

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza