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This way Detroit became the largest city in US history to file for bankruptcy facing an estimated that of nineteen billion dollars.
-- or is Detroit's emergency manager who now have to figure out how to run the setting mister.
Welcome to FOX News Sunday thank you Chris -- -- On Friday at county judge ordered that the bankruptcy filing be withdrawn because you said that it violates the rights of the city pensioners.
And and let's put up on the screen because article -- section 44 of the Michigan constitution -- as.
The quote financial benefits of each pension plan and retirement system of the state and its political subdivisions shall not be diminished.
Now the state is appealing.
Not court order but is the county judge wrong.
Well Chris as you just noted that's currently in litigation on appealed.
To the Michigan Court of Appeals and because of that I'm somewhat limited -- and what I can or should say.
Suffice it to say they're important questions of federal wasn't involved I think the automatic stay -- already attached prior to that that's going to be litigated in the courts.
But just to follow up -- late.
Obviously when you file bankruptcy you knew what the Michigan State constitutions that so why didn't that stop you.
Well -- we have some pretty grievous problems as you mentioned earlier -- significant debt.
And this the only way that we think that we can resolve is so we were compelled -- But let's talk about the -- because roughly ten billion dollars of the nineteen billion dollar debt of Detroit as unfunded health.
And pension benefits to people -- worked for the city for decades.
And and that raises the question you -- promise that you're gonna pay these pensioners.
Full payments for the next six months but after that.
Isn't there are real possibility that these pensioners who work for the city.
For decades who thought they had a contract with the city but they're going to be in real trouble.
Well there's there's a -- -- their criticism as we said in our proposal that we put out on June 14.
In about five point seven billion.
Of that nine billion is unfunded health care -- -- ability.
And about another three and a half billion of that as unfunded pensions we're gonna have a dialogue with the pension funds about what we can do.
Com and they're two different thoughts.
Com police and fire general services and they may have different levels of funding.
And all we're talking about in this restructuring is the unfunded component of those pension funds I want to be clear.
But I did and there's a dollar is significant -- might make no mistake about -- there are going to be have to be concessions concessions may be different -- fun.
And are going to be focus on the unfunded portion but they will have some components of their.
You are saying that.
Pensioners who work for the city for decades and -- Not gonna get the benefits they thought they were gonna get there are going to be some adjustments they're probably gonna need to be some adjustments what -- to the thousands of people who thought they had to deal with the so.
What I person is saying to him is -- -- highly sensitive you know my mother is a is a pensioner in that sense them I'm very so this is very personal to me.
And I talked to many of them I've seen him -- as a drive around the city they come up to me and they say so so first bomb empathetic about the problem.
But I also say is we don't have a choice.
We've crossed a rubicon on the level we have we have eighteen plus 918 -- nineteen billion dollars in debt and no funding mechanism for so this is.
Question of necessity.
The Obama administration has made it clear that there will be no federal.
Federal bailout for the city of Detroit here's what Vice President Biden said this way.
Here we -- the tour we are now going through exactly in detail what.
Yesterday just -- you -- on the status.
Question it is.
We don't know.
We don't know what would you like to -- the state of Michigan do to help -- would you like to see Washington.
Well right now I'm I'm an appointed official -- elected officials on -- stay in my lane American -- into the political.
Political morass but one thing I would say is we've operate on the assumption that we have to cure this process this problem on our -- We are not expecting the calvary come charging and we're out here and -- and we have to fix it because we -- whistle.
And that's the assumption that were operating -- -- of -- city of Detroit is headed to Detroit the city of Detroit I mean a lot of the stat a lot of the practices that before in my June 14 report.
The talked about the referrals.
Borrowings addiction the debt.
Even a level of corruption from 2002 to 2008 which was significant have created this problem.
Let's talk about -- Steven Rattner who was the former cars are toward Detroit.
But -- a story this week and he says that he believes that an and an essay that he believes Washington should help let's put up on the screen what he -- He writes the 700000.
Remaining residents of the motor city are no more responsible for Detroit's problems.
There -- the victims of hurricane sandy for there is and eventually congress decided to help them question do you agree is.
Is what happened to Detroit like a natural disaster.
Well no I mean natural disasters and acts of god -- you can't plan forming some of the situations that we're in have been coming for sixty years.
Certainly more acutely in the past ten years everybody's known it I mean I'm sympathetic to the sentiment that something needs to be done -- this a little different that being said.
You know hope is not a strategy from my perspective I can't plan on the basis of what may or may not happen it would help may or may not come.
I have to deal with realities and extra realities on the ground right now.
If if that comes in her some -- great but if it doesn't I can't stand around waiting for -- happen.
So you -- -- reality do you think the country Washington has a responsibility.
To help Detroit.
You know I'm I'm going to do I think the country has a responsibility I think Detroit has a responsibility to help itself if it gets other assistants that -- great.
That Washington doesn't have to.
I'm not gonna say it does not gonna -- that it doesn't conflict dealing with the reality on the ground today OK you talk about the flight and it's.
Its own responsibilities we have deployed -- special problems and had our industry that cratered.
The city now has only 40%.
Of the population that it had not gonna -- today.
In a 1950s living over -- I I didn't realize what is a huge city up and runs forty square miles what makes servicing the city got much harder.
Up how much.
Despite these special problems how much of this is the responsibility.
Of Detroit city officials over the years who made commitments.
It did to the residents sort of the city workers that they couldn't -- Well I I think that has certainly has a significant component I mean Detroit.
But the footprint of a 139 miles -- -- fit Boston Manhattan and San Francisco and our -- is a colossal piece of real state.
And I think there has been some a dissonance.
Going back quite aways.
And city leadership the current leadership mayor being tried to do it yeoman job of getting this get his hands around this thing I mean -- reduce government between -- percent.
But Chris there's certainly has been it's been well documented.
-- -- -- -- a lack of focus on this problem for a long time you've.
Possibly having to sell city assets including the international airport in Detroit.
Including Belle isle park.
Including the very valuable treasures at the Detroit institute of art is all -- on the table.
Well you know I said at beginning everything's on the table there are certainly questions regarding some of the grandmothers Feinstein and Ireland -- that we have to address.
Or not address.
But we're gonna try to rationalize -- is this weekend.
Some bankruptcy experts.
Since you made your filing this week have said that that you made it a mistake in -- standard and for his -- -- filing.
Has dropped -- price -- reading to its lowest level.
And I and it says that you're gonna -- with great difficulty even if you restructuring but if you go through all this -- in getting investors ever to trust.
The city if they go out and try to borrow money again.
Chris I've heard that in many other contacts and certainly have been doing this now for the better part of three decades.
And everyone I heard for instance and no one ever by car from bankrupt auto company again and now some of those companies Chrysler has the with him what -- were involved in the Chrysler and -- Every restructuring I've been and I've heard doomsayers say this is going to ruin.
Insert enterprise here.
It's going to ruin it and certainly the credit markets have responded but the reality is.
They're gonna look at the credit rating of -- rehab rehabilitated city.
And that's that he is capable they're gonna make rational decisions because their financial institutions and they can make money lending money to Detroit -- -- -- -- guests and after some -- after -- smoker for awful.
We'll be back in business how long -- on trying to get this done by the fault when he fourteen that's the term for me.
I'm certainly -- -- -- little more than a year that's a little more than a year but the week we now have a judge the judge is gonna have his own ideas that it -- have his own ideas about how this ago.
But we're gonna be very proactive we're asking for a scheduling order we're going out and asking for the appointment of -- retiree committee.
They -- gonna really try to do this with the stats but also good for -- Finally we've talked about Detroit's special problems but is there a cautionary tale here could.
The same thing happen in other said he is where other.
Political leaders have made promises that can't be capped.
You know Chris I'm I'm really focused on Detroit I think our problems are so unique is we generous that you know I would not extrapolate what may happen and other cities what I would say though as you know.
Delay doesn't produce positive outcomes so whatever the problems are deal with -- have the political will the where with all the deal with them now which is exactly what we're doing.
-- -- wanna thank you thank you had a tough job thank you for coming and sharing your your Sunday with us will be follow what happens in Detroit's thank you so much.
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