News / USA

In Bankruptcy, Detroit Cedes Control, Gains a Respite

Detroit Emergency Manager Kevyn Orr addresses the media as Michigan Governor Rick Snyder listens during a news conference about filing bankruptcy for the city of Detroit in Detroit, Michigan, July 19, 2013.
Detroit Emergency Manager Kevyn Orr addresses the media as Michigan Governor Rick Snyder listens during a news conference about filing bankruptcy for the city of Detroit in Detroit, Michigan, July 19, 2013.
VOA News
By filing for bankruptcy, debt-ridden Detroit is buying itself some time to fix its finances, but it also is giving up financial control of its government and handing it to a federal judge.

Law professor Peter Henning at Wayne State University in Michigan said the judge, not the city's elected officials, will be making important decisions about the city's future.
 
"Really, what it is, it's a watershed moment because no longer is it just the emergency manager and the various constituencies in the city. Now it's under the power of the federal judge, and so the decision-making is really out of the control of the people who had a say in the process before," Henning said. "Now what you're talking about is a federal bankruptcy judge deciding who's going to get paid and how much they're going to get paid."

Watch related video by Mil Arcega:

Experts: Bankruptcy May Give Detroit Chance to Start Freshi
X
July 20, 2013 2:40 AM
Detroit, once the prosperous home of the U.S. auto industry, has gone bankrupt. It is the largest city in U.S. history to seek protection from creditors while it negotiates a plan to reorganize. Detroit's troubles reflect the loss of manufacturing jobs and much of its population and tax base. Despite legal wrangling over the filing, experts look at how Detroit's bankruptcy compares with other financially troubled municipalities. Mil Arcega has more for VOA.

Detroit calls itself the Motor City, the home of the American auto industry. But as Americans fell in love with foreign auto imports from Japan and Germany over the last 30 years, Detroit declined. Its population plummeted over several decades and many of its neighborhoods collapsed in decay and abandonment.

As the city's influence as an industrial center waned over the last half century, its elected officials mismanaged the local government, with one of its mayors sent to prison in a sex scandal. Now the city's debt stands at $18 billion or more.

A business and law professor at the University of Michigan, Erik Gordon, told VOA that the city is now paying for its misdeeds. "We had a mayor who was sent to jail, was sent back to jail. We had a city council that for many years was composed mostly of clowns," he noted. "We had a city that was living in fantasyland and that catches up with you. And it caught up with Detroit."

He said American automakers totally misread the allure of foreign-made cars, which over time diminished the city's standing as a symbol of American industrial muscle.

"I can remember when the first cars came over from Japan, and the Detroit automakers and the people in Detroit called those cars rice runners and said nobody will ever buy them," explained Gordon. "You know, times change and you have to face up and you have to compete. Detroit during the best of times got sort of fat and lazy and that's how you fall behind."

The Michigan academic said that by filing bankruptcy, the city will gain time to reassess its finances, although many creditors are unlikely to be paid anything close to what they are owed.

"The idea behind bankruptcy in America is a fresh start. So if you have a city or a company that you think is viable, that you think could go forward if only you get a little bit of a fresh start, you go into bankruptcy with a court-supervised procedure, actually specialized courts, bankruptcy courts, that act as referee, with special powers to get things settled, including some interesting powers to tell debtors that you may be owed $100, but you're only going to get $10," said Gordon.

He said he expects that Detroit will eventually emerge from bankruptcy as a renewed city focusing on the growth of technology businesses and less on its industrial past.

You May Like

Video US, Japan Offer Lessons as Eurozone Launches Huge Stimulus

Euro falls after European Central Bank announces a bigger-than-expected $67 billion-a-month quantitative easing program More

Saudi King’s Death Clears Succession Route

Prince Mohammed Bin Nayef is Saudi Arabia's New Crown Prince-in-waiting More

Cloud Hangs Over US Counterterrorism Efforts in Yemen

Sources say resignations of Yemen's president, government has left US anti-terror operations 'paralyzed,' yet an American military 'footprint' remains More

This forum has been closed.
Comment Sorting
Comments
     
by: Yoshi from: Sapporo
July 20, 2013 9:08 PM
I think if GM had pruduced more cars in Detroit and hired local workers, Detroid would have not been bunkrupted. Toyota is located in Nagoya city and a lot of citizens work for its car industries. Toyota is makng efforts to produce car parts inside Japan as much as possible eventhough it is expensive in wages compared with oversea production.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Worldwide Photo Workshops Empower Youthi
X
Julie Taboh
January 23, 2015 11:08 PM
Last September, 20 young adults from South Sudan took part in a National Geographic Photo Camp. They are among hundreds of students from around the world who have learned how to use a camera to tell the stories of the people in their communities through the powerful medium of photography. Three camp participants talked about their experiences recently on a visit to Washington. VOA’s Julie Taboh reports.
Video

Video Worldwide Photo Workshops Empower Youth

Last September, 20 young adults from South Sudan took part in a National Geographic Photo Camp. They are among hundreds of students from around the world who have learned how to use a camera to tell the stories of the people in their communities through the powerful medium of photography. Three camp participants talked about their experiences recently on a visit to Washington. VOA’s Julie Taboh reports.
Video

Video US, Japan Offer Lessons as Eurozone Launches Huge Stimulus

The Euro currency has fallen sharply after the European Central Bank announced a bigger-than-expected $67 billion-a-month quantitative easing program Thursday - commonly seen as a form of printing new money. Henry Ridgwell reports for VOA from London on whether the move might rescue the eurozone economy -- and what lessons have been learned from similar programs around the world.
Video

Video Nigerian Elections Pose Concern of Potential Conflict in 'Middle Belt'

Nigeria’s north-central state of Kaduna has long been the site of fighting between Muslims and Christians as well as between people of different ethnic groups. As the February elections approach, community and religious leaders are making plans they hope will keep the streets calm after results are announced. Chris Stein reports from the state capital, Kaduna.
Video

Video As Viewership Drops, Obama Puts His Message on YouTube

Ratings reports show President Obama’s State of the Union address this week drew the lowest number of viewers for this annual speech in 15 years. White House officials anticipated this, and the president has decided to take a non-traditional approach to getting his message out. VOA White House correspondent Luis Ramirez reports.
Video

Video S. Korean Businesses Want to End Trade Restrictions With North

Business leaders in South Korea are calling for President Park Geun-hye to ease trade restrictions with North Korea that were put in place in 2010 after the sinking of a South Korean warship.Pro-business groups argue that expanding trade and investment is not only good for business, it is also good for long-term regional peace and security. VOA’s Brian Padden reports.
Video

Video US Marching Bands Grow Into a Show of Their Own

The 2014 Super Bowl halftime show was the most-watched in history - attracting an estimated 115 million viewers. That event featured pop star Bruno Mars. But the halftime show tradition started with marching bands, which still dominate the entertainment at U.S. high school and college American football games. But as Enming Liu reports in this story narrated by Adrianna Zhang, marching bands have grown into a show of their own.
Video

Video Secular, Religious Kurds Face Off in Southeast Turkey

Turkey’s predominantly Kurdish southeast has been rocked by violence between religious and secular Kurds. Dorian Jones reports on the reasons behind the stand-off from the region's main city of Diyarbakir, which suffered the bloodiest fighting.
Video

Video Kenya: Misuse of Antibiotics Leading to Resistance by Immune System

In Kenya, the rise of drug resistant bacteria could reverse the gains made by medical science over diseases that were once treatable. Kenyans could be at risk of fatalities as a result if the power in antibiotics is not preserved. Lenny Ruvaga has more on the story from Nairobi.
Video

Video Solar-Powered Plane Getting Ready to Circumnavigate Globe

Pilots of the solar plane that already set records flying without a drop of fuel are close to making their first attempt to fly the craft around the globe. They plan to do it in 25 flying days over a five month period. VOA’s George Putic reports.
Video

Video How Experts Decide Ethiopia Has the Best Coffee

Ethiopia’s coffee has been ranked as the best in the world by an international group of coffee connoisseurs. Not surprisingly, coffee is a top export for the country. But at home it is a source of pride. Marthe van der Wolf in Addis Ababa decided to find out what makes the bean and brew so special and how experts make their determinations.
Video

Video Yazidi Refugees at Center of Political Fight Between Turkey, Kurds

The treatment of thousands of Yazidis refugees who fled to Turkey to escape attacks by Islamic State militants has become the center of a dispute between the Turkish government and the country's pro-Kurdish movement. VOA's Dorian Jones reports.
Video

Video World’s Richest 1% Forecast to Own More Than Half of Global Wealth

The combined wealth of the world's richest 1 percent will overtake that of the remaining 99 percent at some point in 2016, according to the anti-poverty charity Oxfam. Campaigners are demanding that policymakers take action to address the widening gap between the ‘haves’ and the ‘have nots’, as Henry Ridgwell reports for VOA from London.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid