Comments on: Three Cities in Three Weeks: A Significant Trend in Municipal Bankruptcy?

By: Doug Peebles

Doug Peebles — Mon, 17 Dec 2012 14:43:39 +0000

Thank you!

By: Sadye

Sadye — Fri, 14 Dec 2012 21:11:58 +0000

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By: Guy Davidson

Guy Davidson — Mon, 16 Jul 2012 20:38:32 +0000

Thank you for your comment. We did not intend to sugarcoat it. In fact, we agree that pension liabilities are a significant challenge to some state and local governments, and we have written in depth on the issue in research available to our clients. While we think it extremely unlikely that GASB”s new rules will put even hundreds, much less thousands, of municipalities into bankruptcy over the next several years, we do believe that the rules will push states and localities into taking a tough stance in ongoing collective bargaining agreements. The subject is clearly worthy of its own blog post—so look for more on this topic in the days ahead.

By: Guy Davidson

Guy Davidson — Mon, 16 Jul 2012 17:04:14 +0000

You can access the Fed database here.

By: Tom

Tom — Mon, 16 Jul 2012 15:01:21 +0000

Where can you ifnd the Federal Reserve”s database on CA delinquencies? Thanks!

By: Jeffrey J Brown, CFP

Jeffrey J Brown, CFP — Fri, 13 Jul 2012 21:49:05 +0000

You are sugarcoating the real issue in the municipal bond market, massive unfunded pension liabilities that are sure to sink many, many cities and towns going forward. Further, you”ve made no mention of GASB reform which went into law in June, being implemented in 2013 and 2014, yet you specifically downplay the real issue here “Pension costs certainly play a role in these municipal distress stories, but they are not the underlying cause of the financial stress” without getting into the macro issue here of municipalities putting off funding public pension plans and the resulting liability continuing to explode.

Pension costs in the public sector are 695% of those in the private sector (US Bureau of Labor Statistics) and GASB”s recognition of the unfunded liability of paying these extraordinary benefits is sure to put hundreds if not thousands of municipalities into bankruptcy in the next five years, particularly because many are bound by collective bargaining agreements leaving little if not any ability for cities and towns to negotiate their way out of this mess.

No surprised that you didn”t mention RI, Michigan or many other states having cities and towns in financial peril.

http://www.reuters.com/article/2012/07/10/us-usa-accounting-government-idUSBRE86918P20120710