As three California cities file for Chapter 9 bankruptcy, experts are speculating that insolvency for municipalities may be losing it’s stigma.
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As three California cities file for Chapter 9 bankruptcy, experts are speculating that insolvency for municipalities may be losing its stigma, according to Bloomberg.
“Do I expect more? Yeah, but I don’t expect a tidal wave,” Dick Larkin, director of credit analysis for Herbert J. Sims & Co. in Iselin, N.J., told Bloomberg. “I am starting to wonder whether or not the stigma of bankruptcy in California is going to be taken more lightly now.”
Some experts have witnessed municipal bankruptcy firsthand and expect more to come after California’s most recent insolvencies.
“The dominoes are starting to fall,” John Moorlach, who became Orange County treasurer after the county entered court protection in 1994, told Bloomberg. “You’re going to get something every week, every month.”
San Bernardino’s city council voted to join Stockton and Mammoth Lakes in filing for Chapter 9 bankruptcy protection. The city of 209,000 has more than $220 million of debt and has opted to bypass mediation with creditors due to its fiscal emergency.
“We don’t believe we have enough cash flow to get through the next 60 days,” Jame Penman, San Bernardino’s city attorney told Bloomberg.
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Joey Ferguson is a business reporter for the Deseret News who focuses on public finance. He joined Deseret News after graduating from Brigham Young University-Idaho with a bachelor's degree in journalism in May 2011. He more ..
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Liberal California is finding out where Liberal ideas take us when other peoples money is exhausted. Is hope for nirvana here and now so precious to liberals that here in this mortal sphere with forces of good and evil working on everything, our More..
In our entitlement society, personal bankruptcy lost its stigma years ago, why should it be different for municipalities? Everyone knows that the money owed after a bankruptcy just magically disappears and everyone starts "fresh". I like that More..
Tax payers who are at the foundation of the revolt should not be embarrassed when they have to pay for financially irresponsible politicians. Angry, yes, but not embarrassed.