Detroit, once the symbol of American industrial power, has become the
largest city in U.S. history to file for bankruptcy, a victim of its
declining population and faltering auto industry.
A half century ago, Detroit stood at the center of the country's booming
auto industry and boasted a population of 1.8 million people, many of
them assembly line factory workers drawn to the city by wages that led
to a middle-class life. But when a state-appointed fiscal manager filed
the city's bankruptcy papers Thursday, Detroit's population had dwindled
to 700,000. Many of its neighborhoods are deserted and houses boarded
The bankruptcy filing gives the city protection from its creditors.
Detroit Mayor Dave Bing said he hopes the move will mark a new beginning
for the city, which has been struggling with a budget deficit of more
than $300 million and long-term debt that may total $18 billion or more.
"This is a very, very difficult day for me as I am sure it is for a lot
of our citizens here in the city of Detroit," the mayor admitted during
a news conference. "When I took office over four years ago, I said
Detroit was in a financial crisis and we tried to work our way through
this situation over the last four years. But it has been very, very
In March, Michigan Governor Rick Snyder hired fiscal manager and
bankruptcy expert Kevyn Orr to oversee Detroit's troubled finances,
making it the largest U.S. city under state supervision. Orr said it
soon became obvious that Detroit was on an unsustainable financial path.
reality is, that even a casual observer, has had to understand for some
period of time now that Detroit simply was not on a sustainable
footing," Orr explained, "continuing to borrow, continuing to defer
pension payments, continuing not to pay its bills on time, continuing a
It is not entirely clear what happens next for the city. Orr says the
city will maintain basic services, such as police and fire protection.
But many of the city's street lights have already been cut off.
Declaring bankruptcy casts doubt about the future of public employee
pensions and health care plans in Detroit, which has about 10,000 city
A bankruptcy judge will be appointed to oversee the city's finances.
Eventually, many of the city's creditors might only receive pennies on
the dollar of the money they are owed. Settlement of the case is
expected to take a lengthy period of time, likely more than a year.