State Bankruptcy Proposal Criticized by Both Parties at Hearing
This article is for subscribers only.
Republicans and Democrats in the U.S. House criticized a proposal to allow states to file for bankruptcy to escape their debts, calling it an unnecessary intrusion into local affairs that could roil the bond market.
Republican Representative Lamar Smith of Texas, chairman of the House Judiciary Committee, said in Washington today that allowing bankruptcy filings could encourage profligate borrowing and penalize even sound states with higher interest costs. Former House Speaker Newt Gingrich, a potential presidential candidate in 2012, has advanced the idea.