Saak Vitne: Yes.
This blog will be getting shut down for a bit because of the Kwame Kilpatrick/Bobby Ferguson status hearing scheduled for noontime and I will have to go visit that for a while.
The hearing into the silent "fee letter" with Barclays has continued and while the AFSCME attorney pushed hard on the notion it is a bad idea to keep the letter silent it was Judge Rhodes who weighed in more heavily in that regard. He grilled James Saak Vitne in exceptionally tough fashion. No one raised a voice but the Judge made it clear he is not buying the notion that Barclay’s has the city’s best interest in mind in asking for a seal on the deal. Judge Rhodes specifically asked Saak Vitne about that.
Saak Vitne: It is very important to us to help the city.
Judge Rhodes: What’s very important to you is to make lots of money, right?
Saak Vitne: [hesitating] "Yes." He went on to say that there was nothing written in the contract specificically “if the court ruled one way we would not make a commitment.” Thus saying if the deal is not sealed it would likely stick with the city on it.
Judge: Is it in Barclay’s commercial interest to keep this secret. Your competitors will use it to their advantage in future deals?
Saak Vitne: Yes.
Judge: You are concerned that they will undercut your fee structure? Wouldn’t that be good for your customer?
Saak Vitne: non responsive.
Judge: If, heaven forbid, there is a future Detroit wouldn’t making the letter public help them?
Saak Vitne: No
Judge: Why not?
Saak Vitne: There is a concern that if, going forward in a municipal debtor in financing [bankruptcy lending]if fees are public it will chill lenders.” [give lenders reason to not get into the business.]
Judge: “So much for being willing to help the city!
A Miller Buckfire investment banker was cross examined on the same subject with much less drama.
The City has rested its evidentiary hearing:
The city gave up its right to offer closing arguments.
The objectors are giving their closing arguments:
Mark James of FGIC [Federal Guarantee Insurance Company] says he wants to know the information in the “fee letter”
We're not asking for wholesale dissemination of all of this information.” We would be happy not to disclose in public or on a website.
Judge Rhodes is now asking, "What about objections?"
James: "We will file under seal."
Jerome Goldberg: I was struck by the testimony that Barclay’s is charging a fee to deal with risk taking. It was clear to me ultimately the cost of this deal is being borne by taxpayers. To me when I looked at the deal it’s the people of the city who will be paying on the deal at a higher the idea that the people of the city will be paying for years to come. I believe it is Unconscionable the residents will not know what is in the deal. and I also believe it is against the freedom of information act.; There is a duty to disclose. I would ask you to reject this it would be an insult to the people of the city because they are paying for it and it’s their right to know.”
Sherwood: When dealing with Confidential commercial information you have to deal with expectations. What are the expectations of someone coming in. It’s not public information what the fees and rates are, they are not published on their website.” “But when you walk into a bankruptcy court you have to disclose. In a bankruptcy court it is the rule that you have to disclose. In order for any party in a dip financing concept, fees charged on the loan is a huge issue because one of the main things the parties din the waterfall want to know what are the terms of condition of payment for Barclays. Anybody who is a creditor has a right to know the fees.