Responding to the Foreclosure Crisis in Milwaukee

Everyone by now knows of the terrible consequences we face stemming from the foreclosure debacle. As part of the $700 billion bailout plan passed by Congress this fall, certain monies were allocated for cities and states to address some of the problems with the foreclosure crisis: increased crime in neighborhoods with a concentration of foreclosed (and oftentimes abandoned/vacant) properties; a depressed housing market with rapidly declining housing values; and a declining property tax base as a result of the declining home values and reduction in home ownership.

In order to make recommendations to the City of Milwaukee regarding these problems and on how to spend the $9.2 million allocated to the City in the bailout plan, Mayor Barrett established the Milwaukee Foreclosure Public Initiative (MFPI), a public-private partnership. Our own Assistant Dean for Public Service Dan Idzikowski was one of the leaders of the MFPI, serving as a workgroup chair (which oversaw three committees related to the MFPI’s work). In fact, the Mayor specifically recognized and thanked Dan in his press release on the final work product of the MFPI.

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What’s New in the Classroom: On the Issues

This semester I taught a terrific group of students in my Legislation class. We had engaging and thought-provoking discussions about the legislative process and statutory interpretation. Indeed, some of those discussions continue on this Blog with some of my students participating in the on-line discussion about judicial activism.

As part of the class, I required my students to attend a number of the “On the Issues” programs hosted by our Distinguished Fellow in Public Policy and Law, Mike Gousha (see http://law.marquette.edu/cgi-bin/site.pl?on-the-issues/index for a list of the sessions from this semester along with corresponding podcasts). My reasoning for doing so, as I explained to my students, was to help them connect the material we learned about and discussed in class to real-world examples that impact us in Milwaukee, in Wisconsin, and nationally. And after each “On the Issues,” we had fruitful discussions about what the guest speakers said and how that related to the topics we grappled with in class.

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ESOPS Likely to Suffer First in Tribune Bankruptcy

Graph_down Chicago is NOT the place to be these days (of course people from Milwaukee already know that) — especially if you are a corrupt politician or a financially-stressed newspaper. On the newspaper side of things — Elizabeth Dale (Florida) writes to tell us that the ESOP angle of the The Tribune Company bankruptcy is truly a mess.

She points us to this story from the New York Times Deal Book:

The possibility of a bankruptcy filing at Tribune Company is an embarrassing development for Samuel Zell, the real-estate mogul who took the media company private last December.

But it is likely that Tribune’s employees — or, more specifically, the employees’ stock-ownership plan — would take the first hit.

Because of the unusual structure of Tribune’s $8 billion buyout, Tribune’s employee stock-ownership plan holds 100 percent of Tribune’s common equity, regulatory filings show. Common stockholders are generally the first to take a loss in a bankruptcy restructuring, and they usually recover next to nothing.

Mr. Zell, by contrast, supplied mostly debt in the complex transaction, putting him higher in line to get paid. His $315 million investment in the Tribune deal consisted of a $225 million promissory note; the rest was for warrants to buy about 40 percent of Tribune’s stock in the future.

Great, another self-centered corporate CEO looking out for himself and screwing the employees of his company. I guess we should be thankful that at least he is not asking for a bail out.

More about this story here.

Cross posted at Workplace Prof Blog.

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