Today's Coming Crisis Movie

Friday, March 2, 2012

Stockton could become biggest city to go bankrupt

STOCKTON, Calif. (AP) — City leaders seeking a way to dig out from under massive debts have taken a step toward making Stockton the nation's largest city to file for bankruptcy.

However, thanks to a new California law, the City Council's move also could be the first step toward avoiding such a dramatic move.

Under the state law, municipalities considering bankruptcy must first seek mediation with creditors, with the goal of settling debts without filing for Chapter 9 protection.

Dozens of residents attended Tuesday's six-hour council meeting to oppose the vote to enter mediation, saying they feared it would push Stockton further into trouble. The river port city of 290,000 already has the second-highest foreclosure rate in the nation and one of the highest crime and unemployment rates. Read More