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Bankruptcy attorney tapped as Detroit emergency manager

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    Trace Gallagher reports from Los Angeles

  • Duration 3:15
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The city that gave us the model T.

Supplied the allies during two world wars and -- soul music is now the biggest city in American history to lose control of its own finances Michigan today.

Appointing an emergency manager.

Took over.

See the troubled city of Detroit we knew this could be coming people had hoped it would get worked out it happened governor Rick Snyder.

-- corporate bankruptcy expert.

Kevin or to try to pull the motor city from the economic abyss.

Or is the attorney who helped restructure Chrysler.

But Motown.

The whole different story Detroit's buried under a mountain of debt.

More than fourteen billion dollars of long term liabilities of budget deficit of more than 320 million right now and what that's translating it as.

It's things like this the fire department stretched so -- -- proposed just letting it vacant buildings -- If they catch fire.

This city cannot afford to keep all of its street lights on some city streets are just dark at night.

Trace Gallagher with the news Trace how long do they think the restructuring will take.

Well Harris Kevin or the new emergency management -- manager says -- decided twelve to sixteen month contract but he hopes the job can be done sooner than that -- as the governor said today this problem took more than a half century to create -- look at these numbers.

In 1950 the population of Detroit was one point eight million today 700000.

Which means tax revenues have plummeted so if raising taxes is not the answer then of course you have to lower spending.

And today the mayor said that -- every one is gonna have to give a little listen.

Bottom -- here.

Is that we must stop.

Fighting each other.

We -- start to work together.

And so I'm happy.

-- that now I've got teammates.

I've got partners.

I can help me do some of the things that need to be done and -- city.

Of course if they can't work it out Detroit would likely have to file for bankruptcy would that be the largest US city ever to do so Paris.

You know part of what we've watched and that city is their own internal politics and workings keeping them from going for -- in some cases the City Council I understand it's not exactly embracing this plan to go forward.

No in the City Council had threatened to sue in late today they decided against that but the City Council president still called the mayor a quitter.

For agreeing to this plan I mean.

You think about it the public unions certainly are not happy because a big part of this restructuring that fourteen billion dollar liability means renegotiating pensions and benefits.

But the new emergency manager says bankruptcy would be even more painful -- But the one thing everybody needs to know if you go into bankruptcy chapter nine of bankruptcy -- weighted towards municipality.

I don't want to pull back until -- I have to -- actress for her to pursue a consensual resolution.

In other words a judge would lean toward the city so what he's saying is let's deal now less a judge have to mandate cuts at a later time.

Paris Trace Gallagher thank you very much.

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