One of the nation's three main credit rating agencies calls Gov. Rick Snyder’s proposal to use $350 million to defray Detroit municipal pension losses “troubling,” David Shepardson reports in the Detroit News.
Fitch also said Snyder's plan could damage the state’s image with investors.
Fitch Ratings said in a report Monday that it “believes that the Michigan governor’s recent proposal to contribute $350 million towards Detroit’s unfunded pension liabilities demonstrates continued weak support for bondholder security and repayment stemming from Detroit’s bankruptcy. In Fitch’s opinion, action that suggests pensions’ claim on limited resources should be given priority to that of bondholders could establish a troubling precedent, at least in Michigan and perhaps beyond.”
Earlier Monday, the News weighed the pros of whether the Snyder administration should borrow $350 million to pump into Detroit’s pension funds or set aside $17.5 million in annual payments for the next 20 years from the state’s tobacco lawsuit settlement fund.
In a comment below the article on the News' website about Fitch Ratings, a reader identified as Dennis McLellan questioned whether Snyder's plan to treat the pensioners specially will pass muster in the long run:
There are times like this I wonder if Snyder who as a lawyer and accountant is just giving lip service to this idea of Detroit and DIA bailout. He too has to know bankruptcy law requires all creditors to be treated fairly and Judge Rhodes knows that too. So me thinks Snyder is just blowing smoke knowing the legislature will not approve this and even if it did Rhodes would have questions about the fairness of it. In the end he can at least say to the special interest, hey I tried but they would not let me.
This slow walk by Lansing to approve this tells me it is never going to happen when Snyder said time was short we had to do it right away
