- Associated Press - Tuesday, March 4, 2014

DETROIT (AP) - A federal bankruptcy judge who vetoed two previous deals between Detroit and lenders to settle hundreds of millions of dollars in pension debt has scheduled a hearing Wednesday on a third tentative agreement.

Detroit emergency manager Kevyn Orr announced Tuesday night the banks agreed to accept $85 million from the city to settle the debt.

Judge Steven Rhodes vetoed two earlier tentative deals for Detroit to pay $230 million and $165 million to UBS and Bank of America Merrill Lynch to settle the debt.

Detroit incurred the debt in 2009 when it pledged casino taxes as collateral to avoid defaulting on pension debt payments. The city ended up locking itself into high interest rates on bonds, and the deal became too costly when interest rates plunged.

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