Chicago - A message from the station manager

The [Thursday] Papers

By Steve Rhodes

“A witness to a 2013 police shooting that resulted in a six-figure settlement with the City of Chicago says she was detained by officers and prevented from talking to reporters at the scene about what she saw,” the Chicago Reporter reports.
“Asiah Clark, who watched as a police officer shot 16 times into a car full of unarmed teenagers, has sued the city for violating her First Amendment right to free speech. The shooting was captured in a dashboard camera video that went viral last year.
“Her account of how she was treated is reminiscent of those of witnesses to the shooting of Laquan McDonald, who told lawyers for his family that they were threatened by officers, and it raises questions about whether Chicago police engage in a pattern of silencing witnesses to police shootings. Clark appears to be the first to sue the city over this issue.”


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Here’s the video. There is no audio, of course.

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Here’s the Reporter’s original investigation into the incident.
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Big Bad Bond Deal
The Reader’s Ben Joravsky explains why the mayor’s latest borrowing for CPS is such a bad deal for taxpayers, including this:
“[I]n addition to interest, we have to pay about $9 million in fees to the bond merchants who underwrite the deal – the usual collection of characters that include J.P. Morgan, Barclays, Loop Capital Markets, and so forth.”
Here is an interesting reporting project I’d like to see someone embark on – or one that I would embark on myself if someone was willing to pay me to do so: Track down the actual individuals receiving that collective $9 million – because it’s real people, not the abstractions known as J.P. Morgan and Barclays – and ask if they feel the least bit guilty knowing that their new vacation villas have been funded on the backs of poor Chicago schoolchildren (and regular ol’ Chicago taxpayers, of course) now and decades into the future. Isn’t there any such thing as pro bono bond merchantry?
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But what about the huge risk those lenders are taking? Shouldn’t they be rewarded for that when it comes time for payback? Besides that questionable notion, it turns out that the lenders have tried very hard to eliminate any risk, which you might think should reduce that interest rate.

If Rauner succeeds in driving CPS to bankruptcy, the lenders have some protection, despite all their talk of risk.
According to that agreement, the “pledged taxes” that CPS is dedicating to repay the loan constitute “special revenues” as “defined in section 902(2) of the U.S. Bankruptcy Code.”
My personal favorite section of the bankruptcy code.
As a consequence, that money “could not lawfully be used by the board other than in compliance with” the bond agreement.
In short, if CPS does go bankrupt, these lenders get to cut to the front of the line of creditors.

Now, that’s not the whole story, so I’m glad Ben included this:
“Would this ‘special revenues’ claim hold up in bankruptcy court? I don’t know. A similar claim didn’t hold up when Detroit’s schools went bankrupt. But I suppose it depends on the judge, should things come to that.”
The fact that such a provision didn’t hold up in Detroit is what has widely read and respected bond geek Kristi Culpepper calling bullshit on the bond deal, saying it’s nothing short of a breach of integrity on the part of lenders, who she says have strayed far from their civic mandate:
“One of the more scandalous developments in the marketing of the bond issue was the decision to include language suggesting that the bonds would be protected as ‘special revenue bonds’ in bankruptcy after initial attempts to sell the bonds failed a week earlier,” Culpepper writes at Medium.
“In my opinion, the attorneys who drafted and signed off on this language should not be allowed to practice law going forward. Yes, that is an extreme reaction. But I think it matches the offense.

To me, this goes far beyond an aggressive legal opinion in three respects. First, legislation authorizing bankruptcy does not have to stop at “these entities are authorized to file for bankruptcy.” Such legislation can and often does create a framework for how an insolvent government will be authorized to file; language that affects bondholders and other stakeholders (believe it or not, bondholders are not the only interested party in a municipal bankruptcy) should be treated; and how resources made available from the state could change. It is appalling that attorneys believe they can offer an opinion about how bonds are intended to be treated in bankruptcy even before relevant legislation has been enacted. That isn’t their prerogative and it isn’t CPS’s either.
Second, there is already a market precedent for this kind of language backfiring  – which these firms (and some of the firms that purchased the bonds!) are already aware of. The City of Detroit included similar language in the official statements for its pre-bankruptcy offerings. Here is the official statement for Detroit’s 2010 offering of unlimited tax general obligation bonds  – you can find the language regarding how the bonds should be treated as special revenue bonds beginning on page 34 of the PDF. Not only were the bonds not protected in Detroit’s bankruptcy, those bondholders ended up receiving deep haircuts. That attorneys endorsed the inclusion of this language knowing that doing so proved injurious in the past is a shocking betrayal of their disclosure responsibilities.
Third, the inclusion of this language preys off of investors’ persistently wrong impression that special revenues bonds are invincible in bankruptcy. To me, simply stating that there are not any legal precedents is a dangerous and incomplete representation.

Now, I don’t believe CPS will declare bankruptcy because I don’t believe the Democratic majority in the General Assembly will ever pass the law that would be necessary to make that possible. (State senate president John Cullerton has said it will never happen as long as he is in Springfield, and I believe him.)
But the bond saga exposes the mindsets and motives of all involved (including the governor, who is widely thought to have shit-talked the deal to help drive up the interest rate in order to create the leverage he has talked about for years that he would need to blow up the whole system).
The mayor doesn’t look good here either; he had four years in his first term to make sure this day never came, and his only real plan appeared to have been a Hail Mary from Springfield, which isn’t really a plan at all. Then during his re-election campaign, he and his media pundit friends argued that only he could save the day – his opponent, Chuy Garcia, was so out of his depth when it came to financial dealmaking that he would sink the city.
Now those same folks blame the Chicago Teachers Union because they didn’t agree to the city’s first serious but squishy contract offer, throwing more doubt on the system’s sustainability, which made me recall when we were warned that Garcia was too close to the CTU to cut anything but a sweetheart deal that would bankrupt CPS. An alternate view is that perhaps CTU would have already cut a deal with Garcia because they would have trusted him to keep his word, having also opened the books to them instead of constantly hiding the ball, for one thing, and, for another thing, having aggressively pursued other revenue options including the transfer of surplus TIF funds to CPS, which the current administration just rejected.
In any case, the CTU’s contract maneuvers have nothing to do with the staggeringly awful bond deal (nor do the latest round of cuts), which would have had to occur in any case at this juncture. We just never should have gotten to this juncture.
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I highly recommend reading the whole Culpepper piece. Then check out what’s happening at the school were Rahm sends his kids. (h/t Curbed Chicago)
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Seven Innocent People Went Undercover As Prisoners In An Indiana Jail For New TV Show
Watch the trailer; it looks pretty intense for such a shit-ass county.
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Feeling Sleepy? You Might Be At Risk Of Falsely Confessing To A Crime You Did Not Commit
Really.
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Related: “The city of Aurora will pay $2.65 million to Jonathan Grayson, a man wrongly imprisoned for an Aurora murder for more than 10 years,” the Aurora Beacon-News reports.
These stories have become so routine that it’s easy to pass over them; besides, they happen to “other” people, not people “like us” or people we know.
But can you imagine?
And how many others are there who will spend the bulk of their lives – if not their entire lives – imprisoned for crimes they did not commit? Can you imagine?
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Why The Best Sports Stories Are Beyond The Field
“The executive editor of Sports Illustrated says the biggest headlines are won by investigative stories, from accusations of cheating in professional sports to high school hazing.”
I’m not sure I would put it that way, but there you go.
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BeachBook
We’re still at war, you know.

Posted by The Beachwood Reporter on Wednesday, February 10, 2016

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Posted by The Beachwood Reporter on Wednesday, February 10, 2016

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TweetWood


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Ald. Will Burns in his last act as an alderman, setting up his lobbying career for Airbnb nicely.


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Rahm’s floor leader, as he was Daley’s, which in combination with mayoral ally Burns can only lead one to conclude that this done with Rahm’s consent. (The plausible alternative is that aldermen finally act independently – and do the wholly wrong thing.)


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The Beachwood Tip Line: Let’s bond.

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Posted on February 11, 2016