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Steve Malanga of the Manhattan Institute on the implications of the lawsuits over Stockton pension issues.
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Challenging the eligibility.
Us stock in California's plans to declare bankruptcy is a really -- sourcing and should have been able to file that the city has not acted in good faith by failing to cut pensions.
Stephen Lang has -- senior fellow at the Manhattan institute with the potential implications for the state.
And maybe for the country this is in court and credible long.
It -- of.
Very very interest in case and it's very interesting appreciate and exactly two cases -- -- -- and it's very interesting because we've been saying for a long time as this kind of thought fiscal -- nominee has been rolling across the country that at some point the conflicts that there's gonna be -- conflict between bond holders.
And retiree right because because really it's it's retiree costs and Republican play because in general manager are driving a lot -- This is it.
What I think makes it particularly nations that one of the -- The filers here is -- is an insurance company Assured Guaranty which basically -- shore up pension obligation.
Bond offering so its stock and in 2007 that we don't have enough money -- -- -- -- pension -- we're gonna borrow money -- people -- -- -- now what they're doing in bankruptcy -- Were not gonna -- we're gonna suspend payments on that pension obligation offering but we're gonna continue paying our retirees and the bond holders are saying them.
Well.
Because Japanese cities said while the using obviously Stockton is an example but others and they and their thinking boy.
We have a lot of dead here we're gonna to -- are gonna file for bankruptcy.
However they don't go end and make their case as aggressively as they -- with a big pensions funds -- -- helpers and here's the -- -- here's the thing.
-- the -- and this is about calpers calpers has said.
That if any as Citi tries to cut.
Pension.
The payments -- -- you -- to cut pensions to retirees right or.
That they would challenge it in court and -- the city up in court generic credit calpers yes because this is why the -- -- which remember when a bankruptcy 200 in 2008.
Did not touch pensions did a lot of other things try and if you don't touch pensions as in the -- -- -- Basically given this short this stick to the bondholders and the people who loan and then -- -- -- money but not eight.
Exactly because if you look at the way that.
This stopped in a plan to get out of bankruptcy based legally.
I think like 44% of it written requires cutting.
Payments to bond holders without which the insurers are gonna have to pay and so what the -- is saying is wait a minute this is disproportionate.
You can't do this especially because in their filings Stockton said the pensions were big part of the problem.
