So it's official: Detroit filed for bankruptcy today, making it the largest U.S. city in history to do so.
The New York Times reports:
The decision to turn to the federal courts, which required approval from both the emergency manager assigned to oversee the troubled city and from Gov. Rick Snyder, is also the largest municipal bankruptcy filing in American history in terms of debt.Detroit has been in ruin since the riots the summer I was born. I'd like to think this financial reprieve might help it get back on its feet, but sadly that does not seem to be likely in a city that lost its major source of jobs and was decimated by white flight nearly 50 years ago. For what it's worth, the suburbs of Detroit are as lovely as ever. My recent visit "home" was one of the best times I have had in recent memory.
Not everyone agrees how much Detroit owes, but Kevyn D. Orr, the emergency manager who was appointed by Mr. Snyder to resolve the city’s financial problems, has said the debt is likely to be $18 billion and perhaps as much as $20 billion.
For Detroit, the filing comes as a painful reminder of a city’s rise and fall.
1 comment:
The WSJ reported that the bondholders and the union health and pension funds were offered 10 cents on the dollar with union claims being multiples of the bondholders' claims. The future looks bleak with a probable long fight in bankruptcy. For fifty years the city kept putting off solving the problem and increased the pension/healthcare obligations without funding them. Hopefully the other states such as California, New York and Illinois will learn a lesson but I wouldn't bet a dime on it.
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