Detroit Closer to Filing for Bankruptcy

Governor has ordered an audit of city's books

Detroit's budget problems have worsened to the point that it could run out of cash in a matter of weeks or months and the city could ultimately end up filing the for largest-ever Chapter 9 municipal bankruptcy in the United States. The city's tax revenue and population have shrunk and labor costs have remained out of whack for some time. Frustrated by its lack of progress, Michigan Governor Rick Snyder appointed a team to audit the city's books last month. The audit could result in a state takeover by an emergency financial manager who would seize control of the city's checkbook, and could then propose federal bankruptcy court as the best option. "Detroit is teetering on the verge of bankruptcy after the City Council has failed to make the necessary cuts to deal with having a smaller population," said Rick Jones, chairman of the Republican majority caucus in the state Senate. (CNBC)

[SUBSCRIBE TO LOOP 21 RSS FEED]