Largest City in History of US Files for Bankruptcy (+video)

Flashback: Obama boasted in 2012: ‘We refused to let Detroit go bankrupt’


Photo Credit: J.D. PooleyLargest City in History of US Files for Bankruptcy

By Dominic Rushe. Sinking under huge debts and decades of mismanagement, Detroit formally filed for bankruptcy on Thursday, becoming the biggest US city ever to take such a drastic measure.

Kevyn Orr, Detroit’s emergency manager, took the decision after failing to broker a deal between the city’s bondholders and its pension funds.

The filing sets a new record for municipal bankruptcies and dwarfs the previous record filings by Jefferson County, Alabama, and Stockton, California. No other city of Detroit’s size has ever gone bust.

Orr and the city’s creditors and pensioners will now begin a fraught legal consultation period while a court determines whether the city is eligible for “chapter 9” bankruptcy protection for its $18.5bn debts and liabilities.

In a letter posted with the filing, the Michigan governor Richard Snyder confirmed he had received Orr’s request to start the bankruptcy proceedings. He said it was “clear that the financial emergency in Detroit cannot be successfully addressed outside of such a filing, and it is the only reasonable alternative that is available.”

Here’s the Governor’s explanation:

Read more from this story HERE.


W.H. says Obama monitoring Detroit bankruptcy

By Reid J. Epstein. President Barack Obama is monitoring Detroit’s municipal bankruptcy, a White House spokeswoman said Thursday, but has not committed any federal help for the beleaguered city.

“The president and members of the president’s senior team continue to closely monitor the situation in Detroit,” spokeswoman Amy Brundage said Thursday. “While leaders on the ground in Michigan and the city’s creditors understand that they must find a solution to Detroit’s serious financial challenge, we remain committed to continuing our strong partnership with Detroit as it works to recover and revitalize and maintain its status as one of America’s great cities.”

The tepid reaction Thursday comes after saving the Detroit auto industry was a central feature of Obama’s re-election campaign – when Democrats savaged Republican Mitt Romney for a New York Times op-ed headlined “Let Detroit Go Bankrupt.” Read more from this story HERE.


Related: Municipality Selling Off Museum Artifacts to Reduce Crushing Debt

By Rick Leventhal, Kathleen Foster. An East Coast city that’s been sitting on a Wild West gold mine is finally cashing in on the loot.

Harrisburg, Pennsylvania’s state capital, is auctioning off thousands of antique artifacts this week, hoping the sale will help pull the city out of debt.

Back in 1980, the citizens of Harrisburg elected Stephen Reed as mayor. He envisioned the city as a tourist destination, filled with museums, including one showcasing Harrisburg’s one-time claim to fame as the gateway to the West. He spent more than $8 million on roughly 10,000 pieces, including antique guns, old horse-drawn wagons, “Wyatt Earp’s Days of the Week Shaving Set,” Jesse James and Billy The Kid wanted posters and sheriff’s badges. The city built one museum, but went broke before it could build three more, as the mayor intended.

“He went about it in ways that were not exactly according to rules,” said Arlen Ettinger, President of Guernsey’s, the New York City-based auction house the city hired to sell the items.

“He took city monies to acquire things that he thought would look well in museums, and he was a great fan of the old West.” Read more from this story HERE.