Judge approves Detroit's $85 million swaps deal

Judge Steven Rhodes says city can go ahead with agreement to pay UBS, Bank of America

DETROIT - A federal bankruptcy judge has approved Detroit's plan to settle a bad multi-million dollar pension debt deal with two banks.

Judge Steven Rhodes rendered his decision Friday morning on the city's agreement to pay $85 million to UBS and Bank of America.

Detroit had pledged casino tax revenue in 2009 as collateral to avoid defaulting on pension debt payments, which allowed the city to get fixed interest rates on pension bonds with the banks. But the deal became too costly when interest rates plunged.

Watch: Judge approves swaps deal between Detroit, banks

Rhodes had denied earlier proposals from Emergency Manager Kevyn Orr for $220 million and $165 million settlements.

The actual amount Detroit owes is $286 million.

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