Nightly News   |  July 18, 2013

Detroit becomes largest US city to file for bankruptcy

After nearly a month of negotiations between Detroit’s emergency manager and the city’s creditors, a judge will now oversee the process to resolve the city’s debts. NBC’s John Yang reports.

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>>> the other big story we are covering this evening broke late today. it involves a great american city, once the engine of prosperity, but now detroit has fallen on such hard times , the city is filing for bankruptcy, becoming the largest u.s. city to do so. it is the latest chapter in what's been a slow-moving tragedy of decline. our report tonight from nbc's john yang .

>> reporter: the move is unprecedented, the biggest municipal bankruptcy in american history , a major u.s. city officially declaring it cannot pay its debts, estimated at $18 billion, or meet its basic obligationses to the citizens.

>> this was a very difficult and painful decision but if you look at it, there's no other viable option.

>> reporter: it represents the failure of nearly a month of negotiations between detroit emergency manager , kevin orr, and the city's more than 100,000 creditors.

>> they are stating that they see no other way out. they have admitted they can't do it by their own, that they need the federal bankruptcy court 's assistance to come to a resolution.

>> reporter: a judge will now oversee the process to resolve the city's debts, including about $3.5 billion owed to pension funds . cynthia and her husband are retired detroit police officers.

>> we would lose everything. we owe more on our house than it's worth.

>> reporter: some say the city has been running on empty for years. detroit 's tax base evaporated as the population plummeted from a peak of 2 million in the 1950s to just 700,000 today.

>> you have police cars that are broken down, fire trucks that don't work, ems runs that don't come on time, garbage that doesn't get picked up.

>> reporter: average police response time for highest priority calls? 58 minutes. city buses are unreliable.

>> sometimes i come out here, i wait two, three hours.

>> reporter: lately, high-tech entrepreneurs have breathed life into downtown detroit . analysts wonder about the impact of today's filing.

>> the stigma or pale of bankruptcy may cause people thinking of expanding business or moving business to detroit to rethink that.

>> reporter: late today, the emergency manager , kevin orr, detroit mayor dave ding, reassured citizens that for them, nothing would change. services will keep going and bills will be paid. brian?

>> john yang , who is our chicago-based correspondent. back in chicago tonight , john, what was the financial news out of the city of chicago today?

>> reporter: moody's gave a big hit to the city's credit rating , knocking it down three pegs. moody's mentioned not only a $36 billion unfunded pension obligation that the city has, but interestingly, they also mentioned the gun violence that's been plaguing this city. chicago, from the beginning of the year through may, has paid $40 million in police overtime. brian?

>> john yang on the news from chicago today and of course, the very bad news out of detroit . john, thanks.