California City's Bankruptcy Poses Risk to Pensions

A federal judge allowed Stockton, Calif., to restructure its finances under bankruptcy protection Monday, but he signaled it might have to cut payments to its pension fund, possibly setting a precedent for other cities. Stockton, a port and agriculture center of 300,000 residents 80 miles east of San Francisco, filed in June 2012 for Chapter 9 under the U.S. Bankruptcy Code, which allows municipalities to seek protection from creditors by establishing a plan to resolve their debt. It is the largest U.S. city to file for bankruptcy. Judge Christopher Klein of the U.S. Bankruptcy Court in Sacramento on Monday declined a request by the city's creditors that he dismiss the bankruptcy case, saying the city "will not be able to perform its obligations to its citizens relating to such fundamental matters as public safety, as well as other basic governmental services," without bankruptcy powers.read more at:http://online.wsj.com/article/SB10001424127887324020504578396801452133528.html