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Up in arms against the leadership it blames for San Bernardino's bankruptcy, a group of business people and residents yesterday launched a campaign to recall the California city's council, mayor and city attorney, Reuters reported yesterday. The group, looking for a "clean sweep" inside crisis-hit San Bernardino, presented its initiative on the steps of City Hall before a crowd of residents and local media. San Bernardino, a city of 210,000 about 65 miles east of Los Angeles, filed for bankruptcy in August 2012 citing a cash-flow crisis and a budget deficit of $45 million for the current fiscal year. San Bernardino passed a new budget last week that calls for it to resume payments to CalPERS in July - after a year of non-payments - but not to many other creditors, including holders and insurers of its $50 million in pension bonds.

After California stunned the $3.7 trillion municipal debt market last year with bankruptcy filings by three of its cities, analysts at Standard & Poor's do not expect any more this year, Reuters reported yesterday. Local government finances in California are improving, and concerns of more municipal bankruptcies popping up in the most populous U.S. state are overdone, said S&P analysts. So far this year, there have been no signs of potential muni bankruptcies, said S&P analyst Gabriel Petek, and S&P analyst Matthew Reining added, "We believe most credits are doing quite well." S&P's David Hitchcock also said that local revenues should pick up as California's housing markets improve. He also said that despite the growing attention to rising pension spending, local governments should be able to manage it.

Mike Bolin, the Alabama Supreme Court justice chosen last week to help steer the state's Jefferson County through the biggest municipal bankruptcy in U.S. history, stepped down yesterday after apparently deciding he was not a good match for the job, Reuters reported yesterday. Bolin was seen as a logical selection for the post since he is well versed in the legal history of the county's sewer system, which is at the heart of the $4.27 billion chapter 9 bankruptcy filed by Jefferson County in November 2011. A probate judge for Jefferson County for 16 years, Bolin was confirmed just last Thursday to succeed Jeff Sewell, who took involuntary retirement on April 12.

Bankrupt Stockton, Calif., has reached a settlement with Ambac Assurance Corp. over $13.3 million of city debt that the company insures, the trustee for the debt said yesterday, Reuters reported. Wells Fargo Bank NA served as trustee for the city's certificates of participation, sold by Stockton in 2003 for redevelopment projects. Details of the settlement were not provided in the filing by Wells Fargo with the Municipal Securities Rulemaking Board. The judge overseeing the bankruptcy case has already given his approval to settle the matter.

Stockton, Calif., the biggest U.S. city to have filed for bankruptcy, forecasts $840,000 more in revenue for the current fiscal year than its officials initially anticipated, one sign of how local revenues in California are picking up after several years of declines, Reuters reported yesterday. How the modest increase plays out for Stockton, which has a $155 million annual budget, remains to be seen as the city of 300,000 is preparing a plan for adjusting its debt after recently winning court approval to press on with its bankruptcy case. Other California cities have outlined more substantial revenue gains as the state’s economy gradually improves. But the budgets of California cities, which shocked the $3.7 trillion municipal bond market last year with three bankruptcies filed in a matter of few weeks, will remain tight and face long-term fiscal challenges from pensions and healthcare costs.

A U.S. judge in July could take up the issue of whether a bankrupt city can shield workers' pensions while inflicting heavy losses on bond holders and other creditors, a lawyer for California's pension fund for public employees said on Friday, Reuters reported. Since filing for bankruptcy last year, the California city of Stockton has made a point of maintaining payments to the California Public Employees' Retirement System (CalPERS) while targeting creditors for steep losses. Whether Stockton may press on with that approach could be taken up in coming weeks by Bankruptcy Judge Christopher Klein, who did not take up the matter during a three-day trial last month on Stockton's eligibility for bankruptcy. Instead, he ruled the city of about 300,000 established it is eligible to proceed with its bankruptcy case and craft a so-called plan of adjustment for its debts. But Judge Klein at the same time signaled the closely watched role of CalPERS in Stockton's bankruptcy case could come into focus when the plan of adjustment emerges.

Stockton, Calif., the biggest U.S. city to file for bankruptcy, will restart negotiations with creditors while it develops a plan to adjust its debts and exit court protection by year’s end, Stockton attorney Marc A. Levinson told a bankruptcy court, Bloomberg News reported today. Lawyers for the city and creditors told a federal judge yesterday that they want to try to negotiate an end to the chapter 9 case after a months-long fight over whether Stockton should be thrown out of bankruptcy. The city’s goal is to file a plan to adjust its debt sometime in the third quarter of this year and, assuming Bankruptcy Judge Christopher M. Klein approves it, exit bankruptcy by year's end. This month creditors, including Assured and Franklin Resources Inc., lost a battle to force the city out of bankruptcy. Judge Klein ruled that the city was eligible to remain in bankruptcy, where it’s protected from creditor lawsuits, while it develops a plan to reduce its debt.

Alabama's Jefferson County, readying a plan to emerge from the largest U.S. municipal bankruptcy, yesterday hired a judge to replace the county's top in-house lawyer, who was fired nearly two weeks ago, Reuters reported yesterday. Alabama Supreme Court Justice Mike Bolin will step down from that post to succeed Jeff Sewell, who took involuntary retirement on April 12, officials said. Bolin will earn $224,000 per year, or a bit more than half the nearly $400,000 salary of his predecessor. Bolin was probate judge for Jefferson County for 16 years and has a deep familiarity with the legal history of the county's sewer system, which is at the heart of the $4.27 billion chapter 9 bankruptcy filed by Jefferson County in November 2011.

Moody's Investors Service said yesterday that Detroit's already low credit ratings could sink further if the city is allowed to file for bankruptcy, Reuters reported yesterday. The credit rating agency said that a decision by the city's state-appointed emergency manager and Michigan's governor to authorize a chapter 9 municipal bankruptcy filing would lead to a restructuring of Detroit's debt that could reduce or delay payments on its outstanding bonds. Moody's, which rates Detroit's general obligation debt deep in the junk category at Caa1 with a negative outlook, also said that Detroit could be pushed into bankruptcy if interest rate swap agreements are terminated.

Bankrupt San Bernardino, Calif. passed a new budget yesterday that will allow it to resume paying into the state pension fund on July 1 as it continues to renege on other debts including payments to bondholders, Reuters reported today. The city council vote comes nearly a year after it halted contributions to the California Public Employees' Retirement System (CalPERS), the United States' biggest pension fund. Patrick Morris, San Bernardino's mayor, has stated that the city's other debts "must be taken care of and must be attended to"—but there was no debate about those dues by the council. There was no discussion either about the city's arrears to the pension fund, which top $12 million.