Crisis taking toll on states and cities

We haven't spent a lot of time discussing states and municipalities as the credit crunch continues to unfold. But it's clear that they are suffering. Lot of states--Connecticut, Florida, and Massachusetts, for example--have delayed new financing. The city of Vallejo, CA, recently defaulted on over $200 million. And lots of government entities are having funding issues. For example, the N.C. Turnpike Authority was unable to sell bonds that were to finance the state's first toll road. For now, all eyes are on Jefferson County, AL, which is teetering on the edge of Chapter 9. Fortune puts it this way: "Unlike previous municipal meltdowns, it is a financial disaster that was to a large degree invented, packaged, and sold by Wall Street." It remains to be seen how many others ended up overly reliant on swaps and auction rate securities and the like. Many are lobbying for more federal action.

For more:
- here's the Fortune article

Related Article:
On tap: Pain for cities