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Detroit Spent Billions Extra on Pensions -

Stashed in: Michigan

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Surprise, surprise....  

Jaysus.  "Claw back" sounds awful.

<He said it was conceivable that the city might sue the pension fund, arguing it was unjustly enriched by the infusion of money from the bond market, because the city itself was misled about the size and causes of the pension shortfall. But that approach, if successful in court, would pose a practical problem: if the pension fund disgorged the bond proceeds, its own financial condition would just get worse. And it still has an obligation to pay the pensions.

Another approach might be for the city to try to claw back money from people who received more than they should have, using bankruptcy rules about fraudulent conveyances.

“A clawback is always hard,” Mr. Spiotto said. Instead of trying to get back the money, he said, Detroit might try to reduce those people’s future pension payments, to get back at least part of the overpayments.

“Somebody should be responsible for it,” he said. “And I think the municipality may have a legitimate argument — ‘We don’t have to pay twice.’ ”>

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