The week at a glance...United States

United States

Stockton, Calif.

Historic bankruptcy: Brought low by the housing bust, spiraling pension obligations, and years of bad decisions, this Central Valley community of 292,000 is about to become the nation’s largest city to seek protection under the U.S. bankruptcy code. Three months of mandatory mediation failed to generate a deal with Stockton’s creditors, and the city this week stopped making bond payments. “Bankruptcy is a terrible option until it’s the only option,” said Marc Levinson, a lawyer representing the city. Since 2009, Stockton has trimmed some $90 million in spending and eliminated 25 percent of its police officers, 30 percent of its fire department, and 40 percent of other city employees. Experts cannot predict the extent of further cuts to jobs and pensions, but anxious residents have pleaded that retirees with illnesses be allowed to keep their health insurance. “We have to protect the most vulnerable among us,” said Gary Gillis, a retired fire chief.

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