Is there reason to think that banks are major unhedged bondholders who will actually take losses?

I'd expect Detroit pension funds to be the bigger bond holders of Detroit bonds... No bank of note will have much exposure, the banks aren't stupid.

Any one know what kinds of perks Michigan as for state munis? In colorado you get a tax break on them.

If they do, it's only because Detroit literally has nothing of value left that can be taken.

"If they do"? Help me understand the word "if" there?

If, as in if the Federal Gov't doesn't bail them out.