Word: default
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...that we here, today, sat back and allowed this city to die?" That question was posed last week by Investment Banker Felix Rohatyn as he and other defenders of New York's fiscal integrity fought their most desperate battle so far to keep the city from defaulting. Such a default could have potentially grave consequences for many other city governments. Against the odds, Rohatyn & Co. appeared to be prevailing−temporarily. A plan patched together by Governor Hugh Carey and the Municipal Assistance Corporation (Big Mac) to raise some $2 billion over the next three months seemed to gain...
Carey's legislation also includes a contingency plan in case everything fails and the city defaults. Basically, the city would be given 90 days after a default to arrange a schedule for deferred payment of all its debts. If the schedule is accepted by the state supreme court and followed in good faith, creditors' suits would be rejected. Carey's proposal to raise $2 billion or so seemed to be the lesser evil. Said Rohatyn, who played a key role in selling the package to Albany's legislators: "I told them I was bringing them essentially...
...willing to have egg on my face, stones thrown at me," said Carey. "I'll walk on nails to avoid default...
...figures that made the bankers shudder made default-once considered unthinkable-look more and more possible. Last week the city drew out the last $51 million remaining from the nearly $2 billion raised during July and August by Big Mac. Designed only two months ago to save the city, Big Mac had let it be known that it could not raise the additional $1 billion with which the city had hoped to get through September. On Sept. 12, the city will have to meet a $104 million payroll. Other expenses during the first two weeks of September come...
...finances in order. That meant the kind of retrenchment that Mayor Abe Beame and other city Democrats find painful to contemplate. For a while, they and the Republicans controlling the state senate could not seem to face up to the crisis. The businessmen had to persuade the politicians that default was a genuine possibility, with disastrous consequences for the city's ability to raise money in the future. Said Felix Rohatyn, a New York investment banker who was a key participant in the negotiations: "In a business deal, everyone is usually talking the same language. But here the political...