Municipal Bankruptcy Watch: Is Compton Next?

Compton, California will run out of money on September 1:

At a city council meeting Tuesday, officials announced that Compton is set to run out of funds by Sept. 1. Compton, which has only 93,000 residents, faces a deficit of $43 million after having depleted a $22 million reserve, reports Reuters.

“I have $3 million in the bank and $5 million in warrants due in the next 10 to 12 days,” said city treasurer Doug Sanders during the live-streamed city council meeting. “By then, the council will have a decision to make: don’t pay the bonds, default on them, or have a serious talk about bankruptcy.”

Standard & Poor’s put Compton’s revenue bonds on a negative credit watch last Friday, citing concern over allegations of “abuse of public moneys” and fraud, reports the Los Angeles Times.

S&P also warned that unless they receive independently audited financial information from Compton, the city’s ratings — already at BB, or “junk” status — could be withdrawn or suspended.

Other California cities that are being mentioned as being in danger of declaring bankruptcy: Victorville, Montebello, Los Angeles, Oakland.

2 comments… add one
  • Drew Link

    I have $3 million in the bank and $5 million in warrants due in the next 10 to 12 days,” said city treasurer Doug Sanders during the live-streamed city council meeting. “By then, the council will have a decision to make: don’t pay the bonds, default on them, or have a serious talk about bankruptcy.”

    Bummer. As I’ve said before. This can focus the mind.

    Liberals need to get real. The well is running dry.

  • jan Link

    “Other California cities that are being mentioned as being in danger of declaring bankruptcy: Victorville, Montebello, Los Angeles, Oakland.”

    It’s difficult to even imagine L.A. or Oakland going bankrupt — the former being so big, and the latter is so socially charged, like a volatile stick of dynamite with a short fuse on it, already.

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