— This is the script of CNBC's news report for China's CCTV on January 14, Tuesday.
Welcome to the CNBC Business Daily.
The US city of Detroit is broke, but a handful of charities have banded together to toss the beleagured city a lifeline. CNBC's Scott Cohn has all the details:
Detroit was once the epicentre of US manufacturing, now it's the epitome of what's wrong with American cities – the largest US city ever to go bankrupt.
But apparently, there are a lot of people who not only believe Detroit is worth saving, they're willing to put money behind it.
A court-appointed mediator in Detroit's bankruptcy proceedings has announced private donors have so far put up $330 million dollars to shore up the city's pension system, and preserve the city's iconic art collection.
The money is impressive but barely makes a dent in Detroit's $18.5 billion in liabilities. So officials are pushing ahead with their controversial plan to restructure the city's finances.
That includes a plan to pay off two big banks – Bank of America and UBS – to get the city out of a pair of interest rate swamps contracts the city signed in 2005 and 2006 to hedge its pension debt.
That plan is controversial, not just because of the idea of banks getting paid while city services are cut, but also because critics say the deals were illegal in the first place, and the banks shouldn't get a dime.
The city's emergency manager says he considered suing the banks, and even asked the Securities and Exchange Commission and to get involved.
But, with only a 50-50 chance of succeeding, the city decided to settle. This week, the city, and the banks are asking a federal judge to approve the deals. Other creditors, including the city's labour unions are arguing against it. The judge could decide as soon as this week whether to approve it. Detroit's ability to finance its operations through the bankruptcy, as well as the validity of thousands of other municipal swaps agreements, could hang in the balance.
I'm Scott Cohn, for CNBC Business News. Now, back to you.
Li Sixuan, from CNBC's Singapore headquarters.
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