Word: defaulting
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Dates: during 1970-1979
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These dire events became more and more likely when President Ford vowed emphatically last week "to veto any bill that has as its purpose a federal bailout of New York City to prevent a default." That left city officials with virtually no hope of gaining a federal guarantee of securities that would enable New York to raise some $4 billion by June 30, the end of the fiscal year. Default is almost assured, either in mid-November if the city cannot raise $150 million to help meet payrolls and payoffs of securities due then, or during the week...
...some secrecy, the city is preparing for what anguished officials call Dday. Since early October, a twelve-member team of bankers, businessmen and city officials has been plotting how New York could operate after a default. TIME'sNew York Bureau Chief Laurence Barrett reports that the committee set six priorities for expenditures. They are, in descending order: 1) police and fire protection and garbage collection, 2) food and shelter for welfare recipients, 3) hospital and emergency medical care for the poor, 4) payment to suppliers of essential goods and services, 5) public schools, and 6) interest on city debt...
According to Presidential Assistant L. William Seidman, Ford decided to speak out because "the possibility of default was becoming a greater threat, and no one wanted to talk about what would follow." In his tough speech Ford blamed New York's plight on "bad financial management" over the past decade, during which the city's expense budget tripled to more than $12 billion. He warned that a loan guarantee would set "a terrible precedent." Moreover, he said that the primary beneficiaries of a bailout would be "officials who would thus escape responsibility for their past follies...
California's Bank of America, criticizing Ford, called default "an unacceptable alternative" that would weaken the economy's recovery and further inflate the federal deficit by forcing the Government to make emergency loans and increase welfare payments. But Wriston called Ford's program "highly responsible" and predicted that "the effects of default are containable" and would have "minimal" impact on major New York banks, which hold a total of $2 billion in city and Big Mac debt. According to an estimate by Wall Street analysts, Chairman David Rockefeller's Chase Manhattan is worst off, holding...
These banks are big enough to surmount the shock of default, but some banks outside the city-most of them small-could be in bad trouble. A federal survey found that 53 of the nation's 4,700 national banks hold New York City bonds equal to 40% or more of their capital. Nine of them would probably become insolvent and have to merge with other banks, and 44 could get by with long-term loans from the Federal Deposit Insurance Corp. or the Federal Reserve System. Other Government studies found that 62 of the 9,964 state-chartered...