The city of Stockton is eligible for bankruptcy protection, ruled a federal judge who also delivered a tongue-lashing to Wall Street creditors.
From the Bee's Peter Hecht: "The ruling by U.S. Bankruptcy Judge Christopher Klein means that the city of more than 290,000 residents can continue to seek protection from its creditors as the largest city in America to declare bankruptcy."
"In his 90-minute "finding of facts," Klein portrayed Stockton has having negotiated in good faith with creditors that insured a city pension bond and issued bonds for a downtown redevelopment, including a sports arena."
He also declared that the city took major steps to right its fiscal ship, including a 25 percent reduction in its police force and major cuts of city staff and services, after Stockton became ground zero for housing foreclosures and the national mortgage crisis. By the time it sought bankruptcy last summer, the city has slashed $90 million in three years."
The judge's decision sets up a legal battle over an issue that has roiled communities across California: Can public workers' pensions be cut if the cities they work for are in dire financial straits?
From the NYT's Mary Williams Walsh: "Many states have statutes and constitutional provisions making it illegal to cut public workers’ pensions. Until now, there has not been a prominent test of those laws in bankruptcy — particularly not in California, where the big state pension system, known as Calpers, has been girding for battle on the issue, trying to avoid the precedent of a cutoff or shortfall in a city’s pension contributions."
"Federal bankruptcy law often trumps state laws, but municipal bankruptcies are so rare that there is almost no precedent on how to apply the law to state pension provisions."
"In the ruling, issued on Monday in Sacramento, which affirmed the legal status of Stockton’s bankruptcy, Judge Christopher M. Klein said he could see battle lines being drawn between Calpers — formally the California Public Employees’ Retirement System — and the city’s other major creditors, including several Wall Street companies that either bought Stockton’s bonds or insured them. But he ruled that it was still too early in the case for that battle to be joined."
Speaking of money, some Silicon Valley firms are not happy with a state law governing the online transfers of money, a law they say cripples startups
From the LAT's Marc Lifsher and Jessica Guynn: "At the center of the uproar is a state requirement that firms sending money domestically from one customer to another be licensed and meet stringent criteria for financial reporting, capital and bonding."
"The law was "expanded to keep pace with new technology while, at the same time, continuing to protect the consumer," Financial Institutions Commissioner Teveia Barnes said. "I strongly believe the Money Transmission Act is working as intended."
"High-tech's consternation with portions or all of the law spurred Assemblyman Roger Dickinson (D-Sacramento) to take a fresh look at the 2010 measure, which passed the Legislature with only a handful of negative votes."
An L.A. Superior Court judge has thrown out a key regulation involving homeowners' insurance -- a move that was denounced by consumer advocates and which could affect other kinds of insurance in the state.
From Capitol Weekly's John Howard: "Insurers said the court's decision was necessary to fix a deeply flawed regulation and suggested that the decision may have an impact beyond the issues relating to homeowners' coverage that spawned the lawsuit. The state's insurance regulator and consumer advocates said the rule protected consumers and stemmed from hundreds of complaints from homeowners who felt they had been misled by companies."
"The crux of the case is a 2011 regulation that sets out a detailed, specific, written protocol that insurers must follow when communicating with a client or applicant about the replacement value of a home or structure."
"Former Insurance Commissioner Steve Poizner's regulations tightly define how insurers can communicate with their customers when negotiating coverage, with the goal of ensuring that homeowners' protections were spelled and that people were aware of how much would be available to replace their homes if disaster struck."
The case of the busted bolts, the latest issue in the saga of the $6.4 billion Bay Bridge project, took a new turn Monday with word that the bolts had under gone testing and were okayed amid uncertainty as to their true strength.
From the Chronicle's Jaxon Van Derbeken: "Caltrans' pre-installation tests on the large steel rods that failed last month on the Bay Bridge project raised doubts about their ability to stretch during an earthquake, but engineers OKd using them without knowing how brittle they could become, a top official acknowledged Monday."
"Last week, Caltrans officials acknowledged the snapping of one-third of the threaded steel rods used to bolt down two massive steel boxes - known as shear keys - below the new bridge deck."
"The problem now is that the failed rods, which are up to 17 feet long, can't be replaced easily as there is no longer room to put in new ones because the bridge's roadbed has already been installed. Engineers will have to fashion a fix."
