Wednesday, January 18, 2012

Detroit City Council President-Broke and Busted

I don't know about you but I like to model my behavior after those who are successful at what they do. If I need to lose weight I'm not going to pick a doctor, dietitian or personal trainer who's morbidly obese. If I want career advice I won't listen to some fellow that has been in the same job without promotion for his whole life. And if I want to be successful with the opposite sex I certainly wouldn't seek counsel from a man that hasn't been on a date since the Reagan Administration. But that's just me. Evidently some good citizens of the city of Detroit feel differently.

At a time when the City of Detroit faces bleak choices of bankruptcy, the imposition of some form of emergency manager or consent agreement and/or massive cutbacks and layoffs, the voters decided that they would sleep easier knowing that the City Council President was a man who had already demonstrated repeated inability to pay his bills on time as agreed.

Detroit— City Council President Charles Pugh is facing foreclosure and says he likely will abandon his $385,000 Brush Park condominium. His personal financial struggles come as he and council colleagues fight to bail Detroit out of its own fiscal crisis.
On Friday, Pugh said he can't afford to pay his mortgage after taking a pay cut and leaving a high-paying TV career to run for the City Council.
"Making my mortgage payments has been a struggle for me," Pugh wrote in an email. "I fought hard to stay in my condo because I had an attachment to it, but I can no longer afford to do so."
The mortgage issue is the latest financial problem facing Pugh, 40, a former Fox 2 television anchor and radio show host who was the top vote-getter in the 2009 election. He is paid $76,500 as council president.
"I am devoted to this city and helping us to move forward despite wage cuts and personal sacrifices such as foreclosing on my own home," Pugh said. "These are the tough choices Detroiters make every day, and I am no different."
Well no. Sorry there Chuckie but you are different. Most Detroiters do not earn and will not ever earn $240,000/yr which was Mr. Pugh's approximate salary as a Fox 2 anchor before he quit his job to run for City Council. Now $240K may not be all that much money on the coasts but out here in flyover country it's a pretty nice salary. In fact, per NYT research that salary put Pugh in the top 3% of earners in Metro Detroit.

I am sympathetic to people whose financial situation changes unexpectedly. If my boss were to announce today that my salary would be cut by two-thirds because he thought that was commensurate with my actual production (ahem), well I'd be up the proverbial creek without a paddle. But if I decided on my own to quit my job and go sell T-shirts outside of Comerica Park  can I really demand sympathy? Shouldn't I have thought about how to pay my mortgage before I chose a new job with smaller salary? If I went to my mortgage holder, what would they say to me?

The difference is that unlike with his personal finances, in which the only people hurt by default will be Pugh and/or his creditor(s) and neighbors,  if the City of Detroit were to go bankrupt or have an emergency manager imposed, there would be thousands, if not millions of people negatively impacted. If everyone in Detroit did what Pugh is doing (and many have) the bottom would fall out of the sickly housing market and the moribund tax base would die.
That said there are more people who are walking away from their mortgage and some intellectuals even think that this action may be both moral and in your best interest. So this is very mixed up with an individual's concept of right and wrong and their bottom line self-interest. I was raised to consider that the time to ruthlessly pursue your self-interest is BEFORE you sign your name to a contract. Once you've agreed to terms, you should live to those terms. Pugh was making more than enough money to make a larger down payment on that condo or get a place just as nice for a little bit less money.  And it appears that Pugh's chaotic personal finances may be shading over into his political finances.

Judging by his personal life Pugh seems to not understand the link between cause and effect, present action and future consequences. That would bother me if I were a Detroit resident relying in part on Pugh to help find a solution to the financial crisis.
1) Do Pugh's personal financial troubles have anything to do with his job overseeing the city finances?
2) Is it okay to walk away from a house or condo that you can no longer afford?
3) Does a leader have a responsibility to set a standard for financial probity?
4) If someone owed you money but said that times were bad now and therefore they wouldn't be paying you back, would you be understanding and accepting?
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