bankruptcy

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College students wouldn’t face the threat of lenders garnishing their wages if they can’t repay private student loans under a bill passed by the California Assembly today.  Amy Quinton reports from Sacramento.

Unlike federal student loans, private student loans can’t be forgiven in bankruptcy and banks can garnish up to 25 percent of a student’s wages. Democratic Assemblymember Bob Wieckowski authored a bill he says would help under-employed, debt-saddled graduates. He says the bill would simply eliminate one way private lenders can collect repayment.

Marianne Russ / Capital Public Radio

The city of Stockton has begun a four-day trial in U.S. Bankruptcy Court.  At stake: whether the city should be eligible for Chapter 9 bankruptcy protection.

The case has other local governments watching closely – particularly those that still face large budget deficits.  Chris McKenzie with the League of California Cities says he believes cities will “move heaven and earth” to avoid future bankruptcies.

Fresno based poultry producer Zacky Farms has filed for Chapter 11 bankruptcy protection, citing the high cost of grain the company uses for feed. 

The 70 year old firm is the second largest poultry company in California and employs around 1,500 workers. The company filed its petition in U.S. Bankruptcy Court in Sacramento on Monday.

The company released a statement saying that it "has been under severe stress due to historically high corn and soybean meal prices." A drought throughout much of the Midwest has caused grain prices to rise in recent months. 

Joe Moore / Valley Public Radio

The City of Fresno's precarious financial position is leading to more repercussions in the investment community. On Friday, the firm Standard & Poor's downgraded the city's credit rating from "A" to "BBB." Last month, the two other major credit ratings agencies, Fitch and Moody's issued similar downgrades.

The rating of "BBB" is Standard & Poor's next to lowest "investment grade" rating. The firm also gave Fresno's  financial outlook a "negative" rating, meaning future downgrades are possible. 

Joe Moore / Valley Public Radio

More California cities may file for bankruptcy and default on bonds in the coming months, according to a report released today by a major credit rating agency.

In a report titled “Why Some California Cities Are Choosing Bankruptcy” Moody’s Investors Service warned that the risk of more municipal bankruptcies in the state has gone up.

So far this year, three California cities have filed for bankruptcy, Stockton, San Bernadino and Mammoth Lakes.

Many cities around the country are faced with growing costs and shrinking revenue. Despite making sweeping cuts, Stockton, California recently became the largest city to file for bankruptcy. Host Michel Martin talks with Stockton Mayor Ann Johnston about how she's managing a city that's operating in the red.

Could the City of Fresno follow Stockton, Mammoth Lakes and San Bernadino in declaring bankruptcy? According to Barron's, Wall Street experts remain concerned about Fresno's financial position, thanks to the city's long term labor contracts and limited revenue options. They say the downsides of filing for Chapter 9 protection will likely serve as a deterrent for most cities, but Fresno's case is still a concern.