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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsU.S. state bankruptcy push would disrupt municipal bond market: BofA
U.S. LEGAL NEWS APRIL 24, 2020 / 2:16 PM / UPDATED 9 MINUTES AGO
CHICAGO (Reuters) - Allowing U.S. states to file for bankruptcy is not the way to deal with deep financial problems the governments are facing from the COVID-19 economic disaster, and would knock down the municipal bond market, BofA Global Research said on Friday.
In a research report BofA said the $3.8 trillion muni market where states, cities, schools and other issuers sell debt would certainly sell off if the idea garnered support.
U.S. Senate Majority Leader Mitch McConnell on Wednesday brought up state bankruptcy as a preferred alternative to sending more federal money to the governments to plug their budget holes and potentially pay for pensions. President Donald Trump on Thursday said his administration would look at the idea.
Several Democratic governors slammed the notion as irresponsible. [L2N2CB0KR] Municipal market analysts said the move would face big political and constitutional hurdles and was unlikely to gain traction.
Reporting by Karen Pierog in Chicago; Editing by Alden Bentley and Matthew Lewis
https://www.reuters.com/article/us-health-coronavirus-usa-municipals/u-s-state-bankruptcy-push-would-disrupt-municipal-bond-market-bofa-idUSKCN22630K?il=0
Wellstone ruled
(34,661 posts)Depression and not a recession much greater than the one that started in 1929 with similiar underpinnings today. And most likely last a decade or more. Moscow Mitch most likely never cracked a Econ Book in his life.
SWBTATTReg
(22,156 posts)purposes. They (most of the bonds) do provide a somewhat decent rate of return, and usually the interest income received on such state bonds are tax free if you are a resident of that state (not all of them, but a good chunk of the states).
Perhaps if the republican-controlled Senate and screwed up so called president quit giving expensive tax cuts to $billionaires and $millions who didn't need the tax cuts to begin with (the 2017 tax cut and jobs bill)?
and rump said that he would look at it? he has no authority on state issues.
however, if I were a betting man, guess what will happen? A lot of the southern states and perhaps some of the western states (mostly run by republicans) will jump onto the bandwagon and declare bankruptcy.
I seem to recall somewhere a state/some jurisdiction did this (declared bankruptcy) but I forget the particulars. So, once again, investors will get screwed, who bought the state bonds and other obligations for the interest income. Ah, the republicans win again, as the 'experts' on economic and financial matters.