DTN News - FINANCIAL CRISIS: Bankrupt Detroit Cannot Wait For Federal Cavalry-City Manager
Source: DTN News - - This article compiled by Roger Smith from reliable sources Reuters
(NSI News Source Info) TORONTO, Canada - July 21, 2013: Detroit must dig itself out of the hole it created and cannot wait to see if the federal government will come to its rescue, the city's emergency manager said on Sunday.
Kevyn Orr, charged with guiding the collapsed Motor City out of the largest municipal bankruptcy in U.S. history, said any outside assistance would be "great" but he is not banking on it.
"Hope is not a strategy from my perspective. I can't plan on the basis of what may or may not happen or what help may or may not come," Orr said on "Fox News Sunday."
"We are not expecting the cavalry to come charging in," he said. "We have to fix it because we dug the hole."
Detroit filed for bankruptcy on Thursday, setting the stage for a costly court battle with creditors and opening a new chapter in the long struggle to revive the cradle of America's auto industry.
If approved by a federal judge, the bankruptcy would force Detroit's thousands of creditors into negotiations with Orr to resolve an estimated $18.5 billion in debt.
Detroit Mayor Dave Bing said he was talking to officials in Washington about what they could do to help.
"I'm not sure exactly what to ask for. I mean, money is going (to) help, no doubt about that, but how much?" Bing said on ABC's "This Week."
The mayor has had no executive authority since Orr's appointment as emergency manager in March.
Michigan Governor Rick Snyder told CBS' "Face the Nation" the city's problems had been 60 years in the making and he saw no prospect of a federal or state bailout.
Detroit has been hit hard by the move away from industrial manufacturing in America since the 1950s, its problems compounded by chronic mismanagement and a dwindling population. Retirees now far outnumber active workers among the city's 700,000 residents, and unfunded pension liabilities are a key source of its problems.
After the economic collapse of 2008, Washington injected billions of dollars into automakers General Motors Co and Chrysler as the first step of a quick bankruptcy process. But the federal government made no promises this time.
Vice President Joe Biden said on Friday said it was unclear whether Washington could help.
Steven Rattner, who led the auto industry restructuring in 2009, said it would be a mistake for Michigan and the federal government not to provide funds for the city.
"America is just as much about aiding those less fortunate as it is about personal responsibility. Government does this in so many ways; why shouldn't it help Detroit rebuild itself?" Rattner wrote in an opinion piece Friday in The New York Times.
The bankruptcy led investors to dump the city's municipal bonds on Friday but Orr deflected criticism that it will be hard for investors to lend the city money again.
"The reality is, they are going to look at the credit rating of a rehabilitated city. And if that city is capable, they're going to make rational decisions because they are financial institutions," Orr said on the Fox program.
"After some time, after this little kerfuffle, we'll be back in business."
*Link for This article compiled by Roger Smith from reliable sources Reuters
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