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Wall Street lenders want bankrupt city to pay them before own retirees

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The city of Stockton, California declared bankruptcy a month ago and is in the process of sorting out its financial affairs. Now it has been hit with a fresh indignity in the form of a threatened lawsuit from Assured Guaranty, a company based in Bermuda which provides insurance against defaults on municipal bonds.

In 2007, Stockton borrowed $125 million in the bond market to pay for enhanced pension benefits and invested the money in its California Public Employees’ Retirement System (CalPERS) acount, where it lost about one-third of its value in the economic crash. Stockton still owes $124 million in payments on the bonds, but its bankruptcy plan calls for it to pay only $21 million.

Assured Guaranty finds it unacceptable that Stockton is giving top priority to paying its own employees’ pensions. It calls this “a contortion of the bankruptcy process” and insists that it is unacceptable for the city to “prefer one class of similarly situated creditor over another.”

The “similarly situation” part is what’s in question, though. According to the general counsel of CalPERS, under California law “the obligations owed to the public workers of the city have priority over those of general unsecured creditors.”

When the city of Vallejo declared bankruptcy in 2008, for example, and officials considered scaling back pension obligatons, pressure from CalPERS forced them to back down.

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The Sacramento Bee points out, however, that pension obligations are no longer as ironclad as they once were. In California, the cities of San Diego and San Jose have approved ballot initiatives — which are being challenged in unions — to scale back the promised benefits for current employees. Other states have reduced cost-of-living increases for retirees, and when Central Falls, Rhode Island declared bankruptcy last year, police and firefighters agreed to accept at 25% cut in their pensions.

Meanwhile, Assured Guaranty has been struggling with its own financial problems. Last December, S&P downgraded its credit rating, and in May it posted a first quarter loss on derivatives losses.

There is thus reason to believe that the lawsuit is intended quite seriously — and there is a chance that it could lead to a revision of the laws involving bankruptcy and retirement plans.

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Photo by Montyofarabia (Own work) [CC0], via Wikimedia Commons


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White supremacists accounted for majority of terror-related arrests in last year: FBI director

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FBI Director Christopher Wray told lawmakers on Tuesday that his agency has so far made roughly 100 terrorism-related arrests so far this fiscal year -- and the majority of them are related in some way to the white supremacist movement.

As Washington Post reporter Matt Zapotosky reports, Wray made his remarks about white supremacist terrorists while being questioned by Sen. Dick Durbin (D-IL) during an appearance before the Senate Judiciary Committee.

Despite the fact that white supremacists accounted for a majority of terror-related arrests in the first three quarters of this fiscal year, however, Wray also said that the FBI still considers jihadi-inspired terrorism to be the greater overall threat.

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Florida cop runs down joy-riding black teen on bicycle — then officers shock him with a Taser

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Florida police chased down a joy-riding black teenager, struck the bicycle he was riding and then violently arrested him after he fled in terror.

Jaydon Stubbs and four friends were riding July 17 on their way to Hollywood Beach when an officer spotted the teens in an area where there had been a string of recent burglaries, reported WPLG-TV.

The officer saw the boys popping wheelies and ignoring traffic laws, so she tried to stop them for questioning -- but they split up and rode away from her.

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Here’s how Boris Johnson is already shaping up to be Britain’s Trump

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On Tuesday, Boris Johnson, former British Foreign Secretary and leader of the Conservative Party, secured the votes in Parliament to become the next Prime Minister of the United Kingdom.

It is an outcome that was long considered likely — and it creates parallels with the 2016 election of President Donald Trump in the United States, as there are a great many similarities between the politics and styles of these two men, notes NPR.

First, and most obviously, both men are brusque right-wing populists who have made controlling immigration their core issue on the political stage — in Trump's case it is building the wall, while in Johnson's case it is implementing Brexit.

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