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Detroit not expecting federal bailout

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By The Los Angeles Times

Published: Sunday, July 21, 2013, 7:09 p.m.

WASHINGTON — Michigan's Republican governor said on Sunday he does not expect — nor necessarily want — a federal bailout of Detroit as the largest city in the nation to file for bankruptcy struggles to provide services and pay pensions for its workers.

Gov. Rick Snyder pledged that city operations would continue, but he sought to lower expectations that Washington might step in to save the city. In 2009, the federal government intervened to rescue much of the auto industry, which is headquartered in Detroit.

The bankruptcy filing “is a very tragic situation, and this was a very difficult decision, but it's the right one,” Snyder said on CBS's “Face the Nation.”

“If the federal government wants to do that, that's their option,” he said, referring to a bailout. “The way I view it is I want to partner with all levels of government to stay focused on services to citizens.”

Some have compared the city's plight to that of a natural disaster, worthy of federal intervention.

But Mayor David Bing said “it's very difficult right now to ask directly for support.”

“Now that we've done our bankruptcy filing, I think we've got to take a step back and see what's next,” Bing said on ABC's “This Week.” “There's a lot of conversation, a lot of planning, a lot of negotiations that will go into fixing our city.”

Vice President Joe Biden said last week it was unclear whether the federal government could play any role in helping Detroit provide services or pay its retirees.

Federal law governing municipal bankruptcies does not provide for the kind of quick restructuring that occurred in the auto industry rescue. Moreover, a federal bailout of Detroit would probably require legislation passed by Congress, which seems almost impossible in the current political environment.

Snyder's appointed turnaround expert, Kevyn Orr, said there was no alternative to bankruptcy and Detroit filed for Chapter 9 relief last week. Decades of declining population and fiscal mismanagement, Orr said, left the city $18 billion in debt.

The population of the once-thriving city has fallen steadily for more than half a century, to 700,000 from more than 1.8 million at its peak in 1950, leaving the city struggling to provide police, fire and general services across a huge metropolis pocked with vacant lots and abandoned buildings.

Orr, who represented Chrysler during its successful restructuring, said the city had few expectations of a federal bailout.

“We are not expecting the cavalry to come charging in,” Orr said on “Fox News Sunday.”

 

 
 


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