Compton, Calif. could be the fourth city in the Golden State
to seek bankruptcy protection. At a city
council meeting Tuesday, officials announced that Compton is set to run out of
funds by Sept. 1. Compton, which has only 93,000 residents, faces a deficit of
$43 million after having depleted a $22 million reserve, reports Reuters.
"I have $3 million in the bank and $5 million in
warrants due in the next 10 to 12 days," said city treasurer Doug Sanders
during the live-streamed city council meeting. "By then, the council will
have a decision to make: don't pay the bonds, default on them, or have a
serious talk about bankruptcy."
Standard & Poor's put Compton's revenue bonds on a
negative credit watch last Friday, citing concern over allegations of
"abuse of public moneys" and fraud, reports the Los Angeles Times.
S&P also warned that unless they receive independently
audited financial information from Compton, the city's ratings -- already at
BB, or "junk" status -- could be withdrawn or suspended. Compton may not be able to meet S&P's
demands in time. The city's independent auditor, Mayer Hoffman McCann, recently
declined to sign off on the city's financial statements and quit the account
entirely, reports the Times. The firm stated that they couldn't get anyone at
the mayor's office to cooperate with the audit inquiry….
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