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 Positive Messaging Helps Revamp Ethiopia's Image

In country once connected with war, poverty, famine, headlines now focus on fast-growing economy, diplomatic reputation More

Russian Activist Thinks Kremlin Ordered Nemtsov's Death

Alexei Navalny says comments of Russian liberals who think government wasn't involved are 'nonsense.' More

Video Land Disputes Rise Amid Uganda Oil Boom

Investors appear to be cashing in by selling parcels of land to multiple buyers 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.
NASA Spacecraft Approaches a Dwarf Planeti
X
George Putic
March 04, 2015 8:51 PM
NASA’s Dawn spacecraft will make history on Friday, March 6, when it becomes the first man-made object to orbit a dwarf planet named Ceres. It is located in the asteroid belt between Mars and Jupiter, almost 500 million kilometers from Earth. Among other objectives, Dawn will try to examine two mysterious bright white spots detected on the planet’s surface. VOA’s George Putic has more.
Video

Video NASA Spacecraft Approaches a Dwarf Planet

NASA’s Dawn spacecraft will make history on Friday, March 6, when it becomes the first man-made object to orbit a dwarf planet named Ceres. It is located in the asteroid belt between Mars and Jupiter, almost 500 million kilometers from Earth. Among other objectives, Dawn will try to examine two mysterious bright white spots detected on the planet’s surface. VOA’s George Putic has more.
Video

Video Young Muslims Radicalized Online

Young Muslims are being radicalized ‘in their bedrooms’ through direct contact with Islamic State or ISIL fighters via the Internet, according to terror experts. There are growing concerns that authorities and Internet providers are not doing enough to counter online extremism - which analysts say is spread by a prolific network of online supporters around the world. Henry Ridgwell reports from London.
Video

Video African Americans Recall 1960's Fight For Voting Rights

U.S. President Barack Obama and thousands of people will gather in the small southern U.S. city of Selma, Alabama, Saturday, March 7th to commemorate the 50th anniversary of a historic voting rights march that became known as “Bloody Sunday." VOA’s Chris Simkins traveled to Alabama and introduces us to some of the foot soldiers of the voting rights struggles of the 1960’s.
Video

Video Positive Messaging Transforms Ethiopia's Image

Ethiopia was once known for famine and droughts. Now, headlines more often point to its fast-growing economy and its emergence as a regional peacemaker. How has Addis Ababa changed the narrative? VOA's Marthe van der Wolf reports.
Video

Video Cyber War Rages Between Iran, US

A newly published report indicates Iran and the United States have increased their cyber attacks on each other, even as their top diplomats are working toward an agreement to guarantee Iran does not develop a nuclear weapon and to free Iran from international sanctions. The development is part of a growing global trend. VOA’s Al Pessin reports from London.
Video

Video Answers Elude Families of MH370 Passengers

For the families on board Malaysia Airlines flight MH370, an airline official’s statement nearly one year ago that the plane had lost contact with air traffic control at 2:40 AM is the only thing that remains confirmed. William Ide reports.
Video

Video Land Disputes Arise Amid Uganda Oil Boom

Ugandan police say there has been a sharp increase in land disputes, with 10 new cases being reported each day. The claims come amid an oil boom as investors appear to be cashing in by selling parcels of land to multiple buyers. Meanwhile, the people who have been living on the land for decades are chased away, sometimes with a heavy hand. VOA's Serginho Roosblad reports.
Video

Video In Russia, Many Doubt Opposition Leader's Killer Will Be Found

The funeral has been held in Moscow for Boris Nemtsov, the opposition leader who was assassinated late Friday just meters from the Kremlin. Nemtsov joins a growing list of outspoken critics of Russia under the leadership of President Vladimir Putin who are believed to have been murdered for their work. VOA’s Daniel Schearf reports from Moscow.
Video

Video Simulated Astronauts Get Taste of Mars, in Hawaii

For generations, people have dreamed of traveling to Mars to explore Earth's closest planetary neighbor. VOA's Mike O'Sullivan reports that while space agencies like NASA are planning manned missions to the planet, some volunteers in Hawaii are learning how humans will cope with months in isolation on a Mars base.
Video

Video Destruction of Iraq Artifacts Shocks Archaeologists

The city of Mosul was once one of the most culturally rich and religiously diverse cities in Iraq. That tradition is under attack by members of the Islamic State who have made Mosul their capital city. The Mosul Museum is the latest target of the group’s campaign of terror and destruction, and is of grave concern to archaeologists around the world. VOA’s Kane Farabaugh reports.
Video

Video Smartphones May Help in Diagnosing HIV

Diagnosing infections such as HIV requires expensive clinical tests, making the procedure too costly for many poor patients or those living in remote areas. But a new technology called lab-on-a-chip may make the tests more accessible to many. VOA’s George Putic reports.
Video

Video Afghan Refugees Complain of Harassment in Pakistan

Afghan officials have expressed concern over reports of a crackdown on Afghan refugees in Pakistan following the Peshawar school attack in December. Reports of mass arrests and police harassment coupled with fear of an uncertain future are making life difficult for a population that fled its homeland to escape war. VOA’s Ayesha Tanzeem reports from Islamabad.

All About America

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