Lawyers for bankrupt San Bernardino, Calif., and the city's creditors clashed in federal bankruptcy court yesterday, with a major bondholder accusing the city of stoking "Main Street versus Wall Street fires,” Reuters reported yesterday. San Bernardino, now in its third year of bankruptcy, accused the bondholder and its bond insurer allies of trying to overwhelm the city with litigation and derail its efforts to produce a viable exit plan. At the same time, a major bondholder claimed it should be treated on equal terms to that of the city's biggest creditor, CalPERS, California's public pension fund. The growing tension between the city and some of its biggest creditors come after the Luxembourg-based bank Europäische Pfandbrief-und Kommunalkreditbank AG, which holds $50 million in pension obligation bonds, filed a lawsuit against San Bernardino in January. Also suing the city in the same lawsuit are Ambac Assurance Corp., which insures a portion of those bonds, and Wells Fargo Bank, the bond trustee and flagship bank of Wells Fargo & Co.
