the muni bond holders are supposed to get paid first
but the town wants to make them take a haircut
but not miss any payments on their pensions
btw, they give firefighters and police officers 90% of highest pay at age 55
a judge, at first, allowed it
but the bond insurer is suing
and will probably win somewhat
because they are asking to make the bondholders take a cut on principal as well
which is unprecedented
but, it’s fraud: borrow money, give it to politically powerful groups, bankrupt the town and keep on doing the thing that made you bankrupt in the first place, to the detriment of the bondholders, who wouldn’t have lent you money had they known
and they shouldn’t have known
since it’s supposed to be illegal
if the precedent is set, a ton of california towns will try to “refinance”
could be bad for the muni bond market
