California Against Bankruptcy for States


In the continuing debate over whether states should be allowed by law to seek federal bankruptcy protection, Dan Walters now chips in his opinion, particularly for the state of California. Counties, cities (like Vallejo did in 2008) and local units of government are allowed to file for bankruptcy in some states in the US but not the states themselves. In California’s case, the state is so deeply in debt that the prospect of bankruptcy is never far from consideration.

However, for any state (not just California) to file for bankruptcy, it would take a legislation passed in Congress. If some Republicans had their way, this would soon become a reality. Newt Gingrich, former House Speaker and potential GOP presidential candidate is all for the idea. Some Republican congressmen are reported to be drafting legislation to that effect.

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