N.Y. on brink of bankruptcy after walk-out

Press, 2 March 1977, Page 8

N.Y. on brink of bankruptcy after walk-out

NZPA-Reuter New ork New York city is on the brink ol bankruptcy, according to the Mayor (Mr Abraham Beame).

A meeting between the Mayor. city employees' unions, and bankers, aimed at reaching agreement on a plan to finance SUSIOOOM to meet overdue debts, ended when union leaders walked out, declaring that th bankers were trying to rule the city. The banks have demanded some form of independent oversight or control committee to make sure the city balances its budget. The unions, fearing such a committee would effectively replace elected officials in the running of the city, have rejected the demand. In a letter to the Mayor yesterday, the banks said that various lawsuits against the city must now be settled before they take part in any refinancing plan. Mayor Beame told reporters that this demand could not possibly be met. “They are bringing us to ■ the brink,” he said. The Federal Treasury Secretary (Mr Michael Blumenthal) said in Washington that he did not favour granting the city’s application for a SUS2SSM Federal loan.

The money would be the ilast part of a SUS2IOOM line of credit wth the Federal Government, established at the end U' 1975. when the city also faced bankruptcy

i The “New York Times” said editorially ye ,-rdav: "If the city does not get its Treasury loan, or fails to pay theSIOOOM on past-due notes, it will necessarily turn to the Federal courts for shelter.

"The judge who takes the bankruptcy case would become the effective government of New York City. He or she would decide what (payments are to be made [with the city’s funds, and ;how much they should be scaled down from contractual requirements — whether for interest, wages, commercial debts, or pension payments. "If such painful adjustments are known to be necessary, let the Federal Government declare it now. so that all may see whether a still self-governing city is capable of forcing upon itself the choices that would otherwise, and probably not so well, be forced upon it by the judiciary.”