Treasury Secretary Rules Out Federal Bailout For Detroit

Treasury Secretary Jack Lew reiterated one again the Administration’s position that there would be no Federal bailout for Detroit:

Treasury Secretary Jack Lew on Sunday defended the administration’s decision not to help bail out Detroit, saying that the city would need to negotiate its own resolution with creditors.

“Detroit’s economic problems have been a long time in developing. We stand with Detroit trying to work through how it approaches these issues,” said Lew in an interview on ABC’s “This Week.”

But he added that “when it comes to the questions between Detroit and its creditors, that’s really something that Detroit is going to have to work out with its creditors.”

Lew’s comments come one week after Detroit became the largest municipality in American history to declare bankruptcy.

Labor unions have pressed the administration to intervene and provide a federal bailout to help protect the pensions of city workers and retirees. The AFL-CIO on Friday called for an “immediate infusion of federal assistance.”

Notwithstanding the union’s insistence, this clearly isn’t going to happen. Nor should it. Detroit’s problems aren’t going to fixed by a federal bailout, they’re going to be fixed only if the city, its creditors, and, yes, the public employee unions, are willing to reach the agreements needed to completely restructure the city’s obligations. It also may require Detroit itself to rethink its own size and the viability of its current governing model. None of that is likely to happen if the Federal Government comes to the rescue with a cash infusion that is going to end at some point anyway.

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Doug Mataconis
About Doug Mataconis
Doug Mataconis held a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020. He passed far too young in July 2021.


  1. Gustopher says:

    yes, yes, screw the pensions. That’s only for little people, they can pull themselves up by their bootstraps, or eat catfood or something.

  2. edmondo says:

    the city needs to change its name to Detroit Bank. Then Obama’s Administration will throw all kinds of money at it.

  3. bill says:

    @Gustopher: sooner or later people will have to live with their choices, they chose to vote themselves more and more with little regard for the future- or maybe they knew eventually they’d run out of money and didn’t bail soon enough? greed begets greed, plain and simple. at least there’s a Republican guv now so you all can blame him for it despite the decades of decadence.

    anyhow- maybe they’ll do what they did with the Egyptian “non-coup” and declare it “none-bailout”?

  4. rudderpedals says:

    The city is a creature of the state. It would not exist but for the state. Of course bailout is the state’s responsibility.

    As luck would have it the rest of us non-Michiganders will directly partially bailout the retirees’ SSI and indirectly pay the price of yet more deluded austerity.