Word: default
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...York City is assured of being able to pay its bills until December, but the possibly dire effects of an eventual default continue to stir up worry all over the country. Last week a federal study indicated that about 100 of the nation's 15,048 banks had invested sums equal to 50% or more of their capital in New York City bonds and other obligations and thus would be in serious trouble if a default caused the value of those securities to plunge. The banks would probably not be wiped out: Federal Reserve Chairman Arthur Burns has pledged...
...York default would seriously shake the value of bonds issued by other cities; some municipalities are already finding it hard to raise money from investors. New York Mayor Abraham Beame therefore won unanimous support from his 14 colleagues on the executive committee of the U.S. Conference of Mayors, who journeyed with him to Washington last week to plead for federal aid. With a touch of hyperbole Denver Mayor William H. McNichols told Congress's Joint Economic Committee that "every city in the nation is like a tenant in the same building." The mayors proposed two alternative plans: 1) that...
...December, though, the money crunch begins anew: the city will have to come up with more than $3 billion over six months to meet a variety of obligations, including past debt coming due. Unless the Administration begins to recognize the urgency of the matter, the specter of default will then loom larger than ever...
...York is ever to be made whole, there will have to be many more cuts in subsidies, services, payrolls and pensions. To avoid default, the city needs to reduce spending for its huge and underused hospital system, its university, its welfare services and its bloated and underworked bureaucracy...
...question of default now rests heavily on the performance of the Emergency Financial Control Board, the surrogate mayor of New York City. Assuming that the $2 billion financial package holds up, the board will have three months in which to devise a program that can start to put the city on a sound financial basis. If the board succeeds, Rohatyn is hopeful the Federal Government at last may lend some land of support to Big Mac bonds−a guarantee if the paper is subject to federal taxation. New York, in effect, has a new government with a more decisive...