Detroit on Thursday became the largest city in U.S. history to file for bankruptcy, as the state-appointed emergency manager filed for Chapter 9 protection.
Kevin Orr, a bankruptcy expert, was hired by the state in March to lead Detroit out of a fiscal free-fall and made the filing Thursday in federal bankruptcy court.
A number of factors — most notably steep population and tax base falls — have been blamed on Detroit’s tumble toward insolvency.
Detroit lost a quarter-million residents between 2000 and 2010. A population that in the 1950s reached 1.8 million is struggling to stay above 700,000. Much of the middle-class and scores of businesses also have fled Detroit, taking their tax dollars with them.
Orr was unable to convince a host of creditors, the city’s union and pension boards to take pennies on the dollar to help facilitate the city’s massive financial restructuring.
He laid out his plans in June meetings with debt holders, in which his team warned there was a 50-50 chance of a bankruptcy filing.
Some creditors were asked to take about 10 cents on the dollar of what the city owed them. Underfunded pension claims would have received less than the 10 cents on the dollar under that plan.
A team of financial experts put together by Orr said that proposal was Detroit’s one shot to permanently fix its fiscal problems.
If the bankruptcy filing is approved, city assets could be liquidated to satisfy demands for payment.
Detroit’s budget deficit is believed to be more than $380 million. Orr has said long-term debt was more than $14 billion and could be between $17 billion and $20 billion.
(AP)
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7 Responses
Detroit is a majority black city with 67 percent African-Americans. Hundreds of thousands in detroit exist on federal welfare, free housing, and food stamps. Detroit is a wake up call for the rest of America. If you don’t change your way of looking at the outcome of a “dependency” society, your city will be next.
not really samtheman the major industry the auto industry feel on hard time once the reduced their workforce problem started whether the the residence are black white or Jewish.
Actually Detroit isn’t 67% black, it is 82% black. But don’t blame the residents there; the jobs all got exported the the suburbs and the South, and the city was not permitted to annex its suburbs. As a result it is not financially viable and likely will never be. The best thing it could do would be to vote itself out of existence as an incorporated municipality, in effect forcing a merger with its suburbs. City-suburb mergers have worked very well in the places it has been tried, including Jacksonville, Indianapolis, Nashville, Louisville, and Lexington.
No.1: Don’t forget that New York City went to the brink of bankruptcy in the mid-70’s, under Mayor Abe Beame, a known Jew, who was Comptroller for 8 (or more?) years before he became mayor. So put aside your racial theories of fiscal responsibility by public officials.
I would say New York went to the brink because Beame was also a known clubhouse politician who did not understand municipal finance, which is probably the same thing that pushed Detroit over the edge.
Hmmm…I distinctly remember Obama just before the election touting Detroit as one of his many accomplishments bringing them back from the brink of bankruptcy.
I’m sure with the very large Black and Muslim population living there Obama will say we have to bail them out AGAIN!
The racial make-up of Detroit has absolutly nothing to do with its financial problems. All you cryto-nazi racists, please shut up.
#4,
By the time Beame became Mayor, things were pretty much impossible to fix. But indeed he had been City Comptroller for two non-consecutive four year terms and had done nothing in his oversight role; some NY machine pols (Al Smith comes to mind) accomplished great things but not Beame. And your point about #1’s racism is well taken, though, as the mayors who presided over the city’s fiscal decline were all white:
Lindsay (English/Dutch)
Wagner (German)
Impellitteri (Italian)
O’Dwyer (Irish)
La Guardia (Italian/Jewish)