One on One with Detroit Mayor Kwame Kilpatrick
Tuesday, November 27, 2007
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SUSIE GHARIB: Detroit is another American city hard hit by the mortgage crisis and the city hosted today`s emergency meeting of mayors. Joining us now to talk more about the problems facing local economies, Detroit Mayor Kwame Kilpatrick. Mayor Kilpatrick, welcome to NIGHTLY BUSINESS REPORT.
MAYOR KWAME KILPATRICK, DETROIT, MI: Thank you for having me.
GHARIB: Well, tell us how the housing and foreclosure crisis has impacted the Detroit economy. What has been the biggest issue?
KILPATRICK: Well, biggest issue has been quality of life more than anything else. We have not seen the full impact of the decline in property tax revenue. We`ve seen property values decrease substantially. But as far as revenue into the city, we haven`t seen that yet. It is more of the quality of our neighborhoods, the quality of our housing stock, neighborhood deterioration issues. But you also, you know, you see people who continue to lose hope in communities. And so the human toll right now is more than the economic toll. I think after the recess of 2008, if we don`t do something, we`ll really feel the crunch of the economic woe.
GHARIB: So what do you propose to do? What ideas do you have or other mayors today at the conference about turning the situation around? KILPATRICK: Today`s meeting was a very serious, focused and I think tenacious meeting, industries sitting across from mayors. You had Countrywide, Wells Fargo, Bank of America. You had all the different banks from across the country that were sitting there with us saying what are the solutions. We found three areas: one, communication, how do banks, borrowers and lenders talk to one another? Fifty percent of the foreclosures that we saw in America last year were from people who never contacted or had any communication with their lender at all. We want to improve that. So we hooked up with a lot of nonprofit organizations and people who can serve as counselors. So the first thing that came out is that the industry is going to invest and hope for borrowers and counselors and create an infrastructure and build capacity so people have a number to call, 888-955-HOPE was the number that we have. And that goes live December 1st in terms of the investments.
Second, neighborhood deterioration. Who do mayors call when there is a dilapidated property or a property with a broken window? We all heard of the broken window theory. Many of us in our cities, we want to remarket that home, sell it but we can`t get in contact with anyone. We talked about today having access to the service -- of service of the loans or even third party people who are supposedly property maintenance working with the mortgage bankers to go live with the web site that went live today so you can click, put your address in and we learn who the mortgage holder is. So that was another thing. And then the biggest issue of re-modification or restructuring of the loan. And that is the bigger issue. We`re going to give ourselves a time limit all the way out to April because of the resets of 2008 in May, to really focus and deal with that issue. We have $1.2 trillion in property values that are eroding are going down over the next year. $519 billion of that is from foreclosures alone. So we want to tackle that issue in a much more expansive, broader, multilayered approach.
GHARIB: Would you like the Federal government to play any role here or other policymakers? Do you want them to step in or is this strictly a local issue?
KILPATRICK: Well, we thought first that mayors had to engage the industry. Who was missing from the table was Wall Street. We still need to get them to the table as well. I mean the volatility of the market doesn`t help us and our cities sell our paper on the bond market. I mean we`re still looking at our international paper that we`re selling. But that is a whole other issue. But the Federal government has to be involved. They have to be at the table. I mean when Katrina hit, the Federal government worked to get $20 billion. This is like three - this is like 10 Katrinas when you really look at the magnitude of it. We expect next year alone 1.4 million more people to be in foreclosures. The Federal government has to step up. They have to do something now.
GHARIB: Let me ask you about the job market. I know that a lot of construction jobs have been lost because of the slowdown in home building. Are you seeing the job market be affected in other industries in the Detroit area? And what can you do about it?
KILPATRICK: Our industry, of course, that we relied on for 75 plus years has been the automotive manufacturing industry. And that is where we are seeing job losses. I mean we sold a million less cars this year than we did last year. I mean GM, Ford, DaimlerChrysler, I mean Chrysler, excuse me, they are fighting back. But you know, we can`t gain jobs fast enough. And our construction industry, we`ve picked up jobs. We built seven casinos. Detroit hasn`t built -- I mean seven hotels. Detroit hasn`t built a hotel since 1989. We`ve built more houses in the city than we ever built before. So development is going well. We have to diversify the industry base and our heavy reliance on one industry. So there are job growth in the health sector, technology sector, venture capital, finance, service, but we`re losing so many jobs in manufacturing that it is not balancing out. So
GHARIB: Mr. Mayor, I`m sorry, we`re going to have to.
KILPATRICK: continue to grow other sectors in our city.
GHARIB: We`d love to hear more. I`m glad you left us on a little bit of a positive note. Thank you so much and good luck to you and everyone in Detroit as you work through this crisis.
KILPATRICK: Thanks a lot.
GHARIB: My guest tonight Kwame Kilpatrick, mayor of Detroit.
