Jack Lew: Detroit Will Have to ‘Work With Its Creditors’ to Resolve Bankruptcy
(WASHINGTON) -- During an interview for ABC’s This Week, U.S. Treasury Secretary Jack Lew said Detroit would have to deal with its creditors in order to resolve its recently-declared bankruptcy when he was asked about the possibility of a federal bailout for Motor City.
“Detroit’s economic problems have been a long time in developing. We stand with Detroit trying to work through how it approaches these issues,” Lew told ABC’s George Stephanopoulos.
“To that extent that there are kind of normal relations between the federal government and state and local government — we’ve been using those methods. Even in the Treasury Department, we have a program where we work to help with housing programs. I think 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,” he said.
The issue of a Detroit bailout has been a divisive one in Washington. Sen. Lindsey Graham of South Carolina, who has issued tweets expressing his views on the subject, is dead set against it while the AFL-CIO has called for the federal government to provide Motown with assistance. Detroit’s mayor said “not yet” when Stephanopoulos asked him about the possibility of a bailout during their interview last Sunday.
During the interview, Stephanopoulos also asked Lew about a critical decision the president will have to make in the next few months — the choice of who should succeed Federal Reserve Chairman Ben Bernanke when he leaves his post. Lew praised the current chairman, but declined to discuss his preference for who should replace him.
“I have to start by saying that Chairman Bernanke has been an extraordinary and remains an extraordinary Fed chairman,” Lew said. “I’m going to keep private any conversations that we’re having with the president on the question of when and what kind of succession there should be. I think that those conversations are best left in the privacy of the Oval Office.”
The fall showdowns over funding the government loom over Congress, and Stephanopoulos asked Lew if the current disagreement between Democrats and Republicans would lead to a government shutdown.
“It is imperative that Washington be part of the solution, not part of the problem. We can’t afford self-inflicted wounds and we can’t have these kinds of self-created crises month after month, year after year,” he said.
“And I think we’re going to be able to work through these issues. And I certainly hope that Congress isn’t looking to create confrontations and false crises because we did see, in 2011, how bad that is for the American economy,” Lew added, referring to the fight over raising the debt ceiling two years ago that led in part to the subsequent lowering of the credit rating of the United States by Standard and Poor’s.
Asked about raising the debt ceiling in coming months, Lew said the president would not negotiate on the issue.
“The mere fact of negotiating over the debt limit, after 2011, would introduce this notion that somehow there’s a question about whether or not we’re going to pay our bills, whether or not we’re going to protect the full faith and credit of the United States,” he said.
“Well, it’s not OK to default. Congress can’t let us default. Congress has to do its work,” Lew said.
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