Detroit Files for Bankruptcy; City $18.5 Billion in Debt

Detroit filed for bankruptcy Thursday afternoon, becoming the nation’s largest public sector bankruptcy. The move could slash pension benefits to city workers and retirees, and leave bond holders with only pennies on the dollar.

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Detroit knocks Stockton, Calif., out of the record books as the biggest city to file for bankruptcy.

The bankruptcy was filed by Emergency Manager Kevyn Orr and approved by Michigan Gov. Rick Snyder. Snyder said the financial condition of the city left him no choice.

“We have a great city, but a city going down hill for the last 60 years,” he said at an evening press conference. He said 38% of the city’s budget is being spent on “legacy costs,” such as pensions and debt service. He said police take almost an hour to respond to calls, compared to a national average of 11 minutes, and that 40% of street lights in the city are turned off.

“That’s unacceptable,” he said.

Click here to read the full story at CNN.com.

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