Real Estate; Building Plan In Detroit Starts Debate

Published: Wednesday, August 22, 1990

COMERICA INC., one of Detroit’s largest banks, has won approval for a controversial plan to tear down a riverfront auditorium that was donated by the Ford family to the city and put a new corporate headquarters on the site.

After a series of heated public debates, Detroit’s City Council voted 6 to 3 last month to approve the plan by Comerica and the developer, Gerald Hines Interests Inc. of Houston, to buy the Ford Auditorium, demolish it and build a 28-story headquarters. The design, by the architect Cesar Pelli will be made public next month. Comerica will start razing the auditorium, now rarely used but once the home of the Detroit Symphony, this fall, and construction will begin next summer.

The controversy centers not only on the location of the proposed 750,000-square-foot building but also on the economic incentives given by the city. Under an agreement with Mayor Coleman A. Young’s office, the bank will be allowed to buy the site for $7.5 million, with payments delayed 28 years, and receive an $18 million, 28-year interest-free loan for construction.

Downtown Detroit has been the site of relatively little major office construction since the Renaissance Center was built in the late 1970’s. The Comerica project comes just a few months after Gerald Hines began construction of a 50-story office building nearby, and many local real estate people fear a glut of offices in the downtown market.

Opponents, among them an array of business and civic leaders and some members of the Ford family, say the site next to Hart Plaza, a large public space with a huge fountain and an amphitheater, is inappropriate for a high-rise office structure. Woodward Avenue, Detroit’s main commercial thoroughfare, leads into the plaza, making it the core of the city’s riverfront. They also assert that the auditorium should not be torn down. It was built in 1956 to house the city’s symphony orchestra and abandoned last year because of poor acoustics. The orchestra now performs in its original home, Orchestra Hall, which was refurbished in 1989.

Comerica’s supporters say the project will be an important investment by the bank that will keep approximately 1,200 jobs downtown and put a new, world-class office building on the riverfront. The bank defends its plans, saying it could not find another site downtown appropriate for its headquarters that would attract investors to help build it.

Critics say Comerica blackmailed the city by hinting that it would move to the suburbs if the project was not approved. William Clay Ford, grandson of Henry Ford and the largest single shareholder of the Ford Motor Company, criticized the bank’s proposal in a letter to the city and said his family would no longer make donations to the city as long as the Young administration was in office.

Mel Ravitz, one of three City Council members who voted against the proposal, is a party to a lawsuit to stop the project. He said he opposed the plan because the city would be selling an asset to a private company that had been donated for public use.

”This seems to be a violation of the public trust,” Mr. Ravitz said. ”My primary concern now is that other developers will be looking to the city to bargain for other public lands.”

The controversy started in May when Comerica and the city announced the project. The bank said then that it had spent several months looking for a site because the lease in its current headquarters would expire in mid-1993.

”The Ford Auditorium site was the one that best guaranteed that we could attract the financing and tenants to make the building an economic success,” said David Taylor, a Comerica spokesman.

by Tula Connell, Oct 22, 2009

When you’re a member of the American Bankers Association (ABA) meeting in Chicago amid the worst U.S. jobless crisis and most disastrous economy since the 1930s Depression, what’s the logical move to make?

Dress up in a Roaring ’20s costume and party like it’s 1929.

Proving yet again that not only do taxpayer-bailed-out CEOs have no shame, word has it that they plan to flaunt their taxpayer-fueled wealth in our faces, the ABA is sponsoring its Roaring ’20s party in conjunction with its Oct. 27–29 meeting.

AFL-CIO President Richard Trumka will lead thousands of mad-as-hell Americans in a rally outside the ABA meeting on Oct. 27, demanding financial reform and re-regulation that will allow us to rebuild our communities, our lives and our economy.

(If you’re in Chicago, join us Oct. 27 at 10:30 a.m. CST. The march departs from the corner of East Wacker Drive and Stetson Avenue. After about a 15-minute march, the rally will be outside the Sheraton Chicago Hotel & Towers at 301 E. North Water St.)

Because when they’re not stocking up on Jay and Daisy attire, Big Bankers and financial institutions are using the $700 billion in taxpayer bailout money to attack proposals like the Consumer Financial Protection Agency that would actually help working people while decreasing the chance of another Big Bank-fueled financial meltdown. Of course, they’re not using all of our money to fight reform. Some of it—about $7 billion—is going to bonuses for top CEOs.

For decades, these bankers have been dealing to each other, inventing more and more exotic financial vehicles together and basically regulating themselves. No one is safe while they are doing business with each other without oversight or regulation. A 2006 Citigroup report clearly puts it all out there: While the rich are getting a greater share of the wealth, and the poor a lesser share, political enfranchisement remains as was—one person, one vote.

Unfortunately, a big problem in making financial reform happen is actually trying to explain what’s involved. Who understands this stuff? Here’s a simple outline of what the union movement is pushing for right now in Congress.

The Consumer Financial Protection Agency. President Obama’s proposed agency would protect the public against credit card and mortgage rip-offs. The agencies that were supposed to protect us from financial meltdown failed. The new agency would place consumer protection authority in the hands of a single entity that would monitor banks and other institutions—but not your butcher, as the U.S. Chamber of Commerce ludicrously claimed.

A council of regulators to identify and fix systemic risks that could threaten the entire financial system—risks such as institutions becoming “too big to fail,” too complex or too interconnected. When the government intervenes, the goal must be to protect the public, not just rescue executives and rich investors. The past year has proven that the Federal Reserve Board is just too close to the banks. Either we need to reform the Fed or we need to give this job to a truly public agency.

Bring the “shadow markets” into the daylight. Most people—like Michael Moore’s Wall Street guy—probably don’t really know what hedge funds, private equity funds and derivatives are or do. You’re not supposed to—it makes them easy to manipulate. They’ve been unregulated and totally lacking in transparency. These vehicles need serious regulation and oversight before they suck more money into the black hole of convoluted transactions.

Reform corporate governance and CEO compensation to protect the interests of long-term investors—people saving for retirement, not speculating.

As Robert Shapiro notes on the NDN blog, CEOs are richer than ever: “We didn’t need this latest and most conspicuous instance of greed at Goldman Sachs to know that the compensation provided to the uppermost echelons of American business is out of control.”

Since 1990, the pay of American CEOs has jumped from 90 times the average workers’ pay to 250 times—compared to 15 to 30 times for British, French and Japanese CEOs.

Wealth inequality in the United States has been long in coming, according to a new paper by the Center for Economic Policy Research:

While the United States has long been among the most unequal of the world’s rich economies, the economic and social upheaval that began in the 1970s was a striking departure from the movement toward greater equality that…was a central feature of the first 30 years of the postwar period. This is…the direct result of a set of policies designed first and foremost to increase inequality.

Hearkening back a few decades ago when we were told to relax and love to learn the bomb, David Dayen noted yesterday how a Goldman Sachs executive offered us little people similar advice for this jobless era: We “must tolerate the inequality.”

And just to show how big-hearted they are, financial giants are offering jobless workers gigs standing in line for wealthy financial industry lobbyists. Seems the well-coiffed from Goldman Sachs and other beneficiaries of taxpayer bailout money don’t want to wait to get into congressional hearing rooms—where these lobbyists are fighting to kill regulatory reform and proposals like the Consumer Financial Protection Agency and other reforms that would actually help America’s workers.

Bailed-out bank CEOs still living large

By DOUG THOMPSON

Banks that sucked on the public tit of government bailout funds continue to ladle out lavish perks and benefits to the very executives who led them into financial chaos and, in too many cases, the federal government is sitting back and letting it happen.

While cash-strapped Americans find themselves slapped with 29 percent interest rates from the banks that they helped bail out as taxpayers, the financial institutions hand out huge bonuses and fly their top execs around on private jets and pay the tab for luxury hotels and fancy “corporate apartments.”

They ride around in chauffeured limos, play golf at exclusive country clubs with their employers picking up the tab and see little of the pain and suffering that they helped inflict upon many Americans.

Perks for top executives at troubled banks rose an average of four percent last year. In the meantime, Social Security face the coming year with no cost-of-living increase in their benefits and millions of Americans will lose unemployment benefits when they run out soon.

Reports The Washington Post:

Even as the nation’s biggest financial firms were struggling and the federal government was spending hundreds of billions of dollars to save many of them, the companies as a group were boosting the perks and benefits they pay their chief executives.

The firms, accounting for more $350 billion in federal bailout funds, increased these perks and benefits 4 percent on average last year, according to an analysis of corporate disclosures filed in recent months.

Some chief executives, such as Kenneth D. Lewis of Bank of America and Jeffrey M. Peek of CIT Group, the major small-business lender now on the brink of bankruptcy, each received about $100,000 more than a year earlier for personal use of corporate jets. Others saw an increase in the value of chauffeured services, parking or personal security.

Ralph W. Babb Jr., chief executive of Dallas-based lender Comerica, was compensated for a new country club membership, with an initiation fee and dues of more than $200,000. GMAC Financial Services chief executive Alvaro de Molina benefited from a $2.5 million payment from his company to help cover his personal tax bill.

Meanwhile, the top economic advisors to Barack Obama signed off on a deal to protect Bank of America from losses in its questionable takeover of Merrill Lynch.

The Post Also reports:

Top economic advisers to President Obama signed off on a deal to protect Bank of America from losses incurred by its purchase of failed Wall Street firm Merrill Lynch a month before the new administration took office, according to Bank of America documents.

The documents, describing internal discussions at the bank in late 2008, assert that executives were told that incoming National Economic Council Director Lawrence H. Summers and incoming Treasury Secretary Timothy F. Geithner had endorsed the deal to provide new guarantees to Bank of America.

The acquisition has been a source of protracted debate since earlier this year, when questions arose about whether federal officials exerted an inappropriate amount of pressure on Bank of America to complete the deal. There’s also been debate about whether the bank made appropriate disclosures to its shareholders about losses at Merrill Lynch, its negotiations with the government for additional support and compensation plans at Merrill Lynch.

September 22, 2009 by Joe Newman

Everybody knows that insider trading is illegal. Wall Street big wigs who get caught giving their cronies valuable information before it’s made public go to jail. Yet, those same rules don’t apply in the halls of Congress where members, their staffs and other federal officials can use the inside information they gather about upcoming legislation for their own financial gain.

Studies show that Congressional insiders do far better with their stock trades than you and I (See our earlier blog post) . A 2004 study found that investment returns for senators were 25 percent higher than for average investors. In a more recent study, Alan Ziobrowski, a business professor at Georgia State University, analyzed more than 6,000 stock transactions by members of Congress over a six year period and found that members outperformed the market by 1 percent a month and 12 percent a year, which Ziobrowski said was “way outside any random variation.” He and Craig Holman, Public Citizen’s expert on ethics and lobbying, talked about the issue on CNBC’s Street Signs and NPR’s Marketplace.

It’s not just the members of Congress and their staffs who are benefiting from insider information, either. From the NPR story:

The value of information that flows from the inner workings of Washington isn’t lost on Wall Street professionals.

Michael Bagley is a former congressional staffer who now runs the OSINT Group. Bagley sells access and research. His clients are hedge funds, and he makes it his business to mine Congress and the rest of Washington for tips.

All of this is why Holman says it’s important that Congress pass the “Stop Trading on Congressional Knowledge Act” (H.R. 682), which would make government officials abide by the same insider trading restrictions that everyone else faces. As the federal government increases its role in managing and regulating financial institutions, the need for this law becomes even more imperative, Holman said.

You can take action by writing your member of Congress and urging them to pass H.R. 682.