CNN "The Situation Room" - Transcript: Detroit Bankruptcy

Interview

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BLITZER: An historic turning point today in Detroit's financial crisis. The Motor City has now officially declared bankruptcy. It's the largest bankruptcy filing ever for a city in the United States. The governor of Michigan, the Republican, Rick Snyder, is joining us now.

Governor, it's pretty shocking, even though a lot of us have been reporting about this in the previous months, there was no way the state of Michigan, for example, or anyone else, could have bailed out Detroit, without making it go into bankruptcy?

GOV. RICK SNYDER (R), MICHIGAN: That wouldn't have been the right answer, Wolf. Again, this was a very difficult decision to make, but it's the right decision. If you look at it, this was 60 years in the making. And it's really a situation where Detroit's debt, $18 billion, basically, Detroit is broke.

And more importantly than the financial condition is the lack of services to citizens. Now, I'll just give you one illustration. For police response times, they're at 58 minutes now, versus the national average of 11 minutes. The citizens of Detroit deserve better.

So out of respect, I think this is the right course of action, because we can resolve both of those issues through a structured fashion, through bankruptcy.

BLITZER: How long is that going to take, in your opinion?

SNYDER: Well, my hope is we can get through it by fall of next year. I mean, it will be an extensive process, but it's a process where we'll have an opportunity to address the creditors' issues, get those resolved, and put in a plan, a place for improvement for services in the city.

Because there are a lot of great things going on in Detroit outside of city government. The private sector is doing great. Young people are moving to Detroit. And we'll solve this obstacle and then we can grow the city.

BLITZER: So what happens to all those pensions for current and former city employees?

SNYDER: Well, to the degree they're already funded, they're not part of the bankruptcy. It's really the unfunded portion, which there is an unfunded portion. And there was a lot of mismanagement and lack of funding over a number of years. And that does need to be addressed...

BLITZER: So what's going to happen to...

SNYDER: ... but what I would...

BLITZER: Governor, what's going to happen to those people?

SNYDER: Well, what I would say is, that will get addressed appropriately in this process. And, again, our hearts all go out to someone that is living their retirement on a pension. As a practical manner, the bankruptcy process is a better process in the sense that they can have more thoughtful representation.

So one of the first things they ask for is to get representation for the retirees that really wasn't possible without being in the bankruptcy situation.

BLITZER: Do you have a ballpark number? How many people, directly, are going to either lose their pensions, their medical benefits, other guarantees that they thought they had from the city of Detroit?

SNYDER: Well, again, people shouldn't speculate on simply losing things. Again, to the degree the pension plan is funded, there are resources. As a practical matter, there are about 20,000 retirees and 10,000 active employees.

But one of the things to remind people is bankruptcy is a situation that allows you to maintain current things while you work through this process. So tomorrow should be hopefully a regular day in Detroit in terms of services, in terms of employees coming to work and getting paid.

So let's continue that process, but then use the court system appropriately in a thoughtful fashion to get resolutions, so these issues can be put behind us and Detroit has a bright future.

BLITZER: But was there a role for the federal government in trying to save Detroit from going bankrupt?

SNYDER: Well, again, I didn't believe it appropriate to ask the federal government to bail out this situation. The federal government actually has been helpful on a number of fronts, particularly the blight case. We talked to the federal government, and we just got a number of dollars to deal with removing blighted structures in Detroit in partnerships of working with the federal government.

So I hope there are specific programs that the state and federal government can help to deliver better services and better results for the citizens, but it shouldn't be about writing checks. It's about showing real results and better services and outcomes for citizens.

BLITZER: Will 911 calls be responded to as efficiently, as quickly as necessary?

SNYDER: Well, the point is, tomorrow they should be the same as what they are, but what I would tell you is, they're not being responded to good enough today. And that's really part of the bankruptcy process, in addition to dealing with creditors, the city actually gets to present a plan for improvement.

And this improvement plan can be investments to make those times get better, to actually show better response times, and that's critically important, because I respect the people of Detroit, and they deserve a better answer. And they're my customers, along with the other 9 million people of Michigan.

BLITZER: And very quickly, teachers, when school resumes in the fall, are they all going to be working? Are they all going to get paid?

SNYDER: Well, with teachers are a separate system the in the city of Detroit. So they're not part of this. In fact, we've been working with the Detroit Public Schools for the last several years and we're seeing good improvement there. So education is improving.

Let's resolve the city government issue so we can have an exciting Detroit. The young people are already coming here.

BLITZER: What about police and firefighters?

SNYDER: Well, again, there has been major cutbacks. This is really about getting the stability and stopping the decline, by using bankruptcy in a thoughtful fashion, so we can grow the city of Detroit.

BLITZER: And all those people who invested in Detroit municipal bonds, they're going to lose a lot of money, right?

SNYDER: Well, again, there will be cutbacks to creditors in terms of this process. But realistically, there were promises that couldn't be honored, $18 billion in debt. Let's get those resolved and get them to some number that they know they're going to get paid down and then let's move forward.

BLITZER: Governor Rick Snyder, you've got a handful over there. Good luck to you. Good luck to all the folks in Detroit and in Michigan. Thanks very much for joining us.

SNYDER: Thank you, Wolf.

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