U.S. Treasury official named lead on Detroit bankruptcy

Reuters

By Joseph Lichterman

DETROIT, Sept 27 (Reuters) - The executive director ofPresident Barack Obama's Council on Jobs and Competitiveness wasnamed on Friday to manage more than $300 million in federal,state and private aid packages given to Detroit, which has filedfor bankruptcy.

Gene Sperling, director of the president's National EconomicCouncil, announced the appointment of Don Graves, who is also adeputy assistant secretary at Treasury, during a pressconference with Obama administration, state and city officialsin Detroit.

The aid package is a far cry from the $80 billion infinancing extended to the U.S. auto industry during the2008-2009 financial crisis that saved General Motors Co and Chrysler Group LLC from collapse.

But the White House has already ruled out a similar bailoutfor the city of 700,000, a reflection of both a more constrainedfederal budget and increased infighting in Washington.

"It's no secret that things have never been tighter inWashington," Sperling said, making note of gridlock in Congressand the potential shutdown of the government next week.

Detroit became the largest U.S. city ever to file forbankruptcy a little more than two months ago and reported $18.5billion in debt. The city, led by Emergency Manager Kevyn Orr,has been unable to provide many basic services to residents.

A large portion of the more than $300 million in aid, whichcomes from federal, state and private sources, was previouslyearmarked for Detroit, but delivery of the funds was slowed byred tape and other issues.

"Put the bankruptcy aside, we're talking about reinvestmentand revitalization for the city and getting at some longstanding issues that everyone has said needs to be gotten at forthe better part of at least a decade," Orr told reporters afterthe meeting.

Orr said the city also plans to revamp the way it managesits federal grants and has hired consultants to improve theprocess. The White House's chief technology officer and a teamis to be sent to Detroit to improve Detroit's outdated ITsystems.

Sperling and cabinet officials discussed the proposals in aclosed-door meeting at Wayne State University with Orr,Michigan's Republican Governor Rick Snyder, the city's mayor, Dave Bing, and members of the state's congressional delegation.

The Federal Emergency Management Agency pledged to expedite$25 million that will allow the city to hire 150 newfirefighters and purchase equipment to prevent and detect arson.

The U.S. Department of Transportation also pledged nearly$140 million to assist the city's transportation system.

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