CNN "The Situation Room" - Transcript - Detroit Financial Planning

Interview

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BLITZER: Detroit is billions and billions of dollars in debt. Michigan's governor is not waiting any longer for a plan from the city's government.

In a very dramatic move today, he named the Washington attorney Kevyn Orr as his pick to take over the city as the emergency manager.

Republican Governor Rick Snyder is joining us, along with Kevyn Orr.

Gentlemen, thanks very much for joining us.

GOV. RICK SNYDER (R), MICHIGAN: It's great to be with you, Wolf.

KEVYN ORR, DETROIT EMERGENCY FINANCIAL MANAGER: Thank you, Wolf, for inviting us.

BLITZER: Well, Mr. Orr, let me start with you.

What are you going to do? I think you have about 18 months now to try to get Detroit's finances in order.

ORR: Wolf, the first thing I want to do is make an assessment if I can of enhancing city services to the citizens of Detroit. You know, some of the efforts have been made and there are some things in the pipeline we want to focus on those, and then I'm going to sit down with the consultants and with the restructuring team that the governor has in place to try to prioritize what we need to do next based upon the data.

BLITZER: Are you in effect, Mr. Orr, the mayor of Detroit right now? Because they have a mayor, Dave Bing, who was on the show about a month or so ago. Are you now in effect his boss?

ORR: No. The mayor is elected and I am appointed as a creature of state statute. I do have certain powers under state law that allow me to transcend some of the duties that are typically held by a chief executive. But the mayor is still the mayor. I think of myself as exactly what the statute says I am, an emergency financial manager.

SNYDER: And, Wolf, if I'd emphasize, it was great that the mayor was a participant today in the news conference.

ORR: Yes.

SNYDER: We wanted him to be a strong partner in this effort and it was great to have Mayor Bing with us today.

BLITZER: How likely is it, Governor, and I'll let Mr. Orr respond -- how likely is it that this could be a huge bankruptcy in the works right now for Detroit unless you guys come up with a specific plan that's going to be very bitter for a lot of folks there, Governor?

SNYDER: Again, the goal isn't to go into bankruptcy. The goal is to solve the problem. And that's the focus that Kevyn is going to have and that's one reason I was excited to get Kevyn onboard. He is one of the best restructuring bankruptcy people in the country and to make people know this is serious.

But, again, the goal is to work together as a team, go to creditors, work through this in a constructive, positive process, as opposed to just running to bankruptcy.

(CROSSTALK)

BLITZER: Do you expect to throw out or remove some of the long standing contracts with public employees unions and others in order to get the job done?

ORR: I don't necessarily expect to remove or throw them out. I think we're going to take a very deliberative and rational view of those contracts and see what if anything needs to be done to make them reflect the realities and externalities that are on the ground today. I mean, the maintenance of the status quo ante is not an option. We are looking at what we need to do to go forward and create a sustainable future for one of the greatest cities in the history of the country.

So, I'm not doctrinaire. I'm not particularly focused on one particular group. What I hope to be is reasoned and deliberative.

BLITZER: You walked Chrysler through its bankruptcy problems, what, back in 2009. Chrysler has now come back. General Motors similarly gone through bankruptcy coming back.

How would you compare what you're about to do with Detroit to what you did with Chrysler?

ORR: You know, I and my colleagues at Jones Day and the other financial professionals involved were very fortunate to have had the opportunity to take Chrysler through its bankruptcy and your direct question was, how does it compare?

I mean, Chrysler was a situation where we had financing and we were trying to restructure a private business under Chapter 11 of the bankruptcy code. So, they could go forward and make profit and Chrysler is doing that. They're making great profits, having year over year increase in sales. Sergio Marchionne, the chairman of the company, has done a tremendous job bringing that company forward.

The municipal issue is a little different. In addition to benefits to retirees and employees and also debt service, you've got to provide services to the citizens, the customers of the municipality, citizens of the city. So it's a different environment, different priorities, while similar in terms of what needs to be done from the mathematical aspects of a restructuring is a little different in terms of the services you need to provide the citizens.

BLITZER: One final question, Governor. One of Detroit's big problems is its population has decreased by more than half over the past 20 years or so, maybe even two-thirds. What do you do to bring people back to Detroit?

SNYDER: Well, Wolf, one of the good things going on that doesn't get recognized because people dwell on the negative so much is a lot of good things are going on in Detroit. People are moving into the center of the city -- midtown, downtown 95 percent occupancy. Young people want to move to Detroit. A lot of this is resolving the city services question with public safety, with lighting.

And as we resolve these, I think there's a great environment to say Detroit is the value place to be. It's an exciting place to be for young people and there's a lot of up side. So, by resolving city issues, we're going to create a platform because the solution to Detroit in the long term is let's grow Detroit, and a growing Detroit will continue to help the comeback of Michigan.

We're the comeback state. Let's get Detroit onboard and let's go.

BLITZER: If you can get the financial situation stabilized, people will come back to Detroit, but there is a lot to offer in that city.

ORR: Yes.

BLITZER: All right, guys. Thanks very much for coming in.

ORR: Thank you very much, Wolf.

SNYDER: Thank you.

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