Municipal Bankruptcy and Pension Cuts

This recent N.Y. Times article discusses the possibility of municipalities reducing their pension obligations by filing for Chapter 9 bankruptcy, focusing specifically on Central Falls, Rhode Island.  The article quotes U. Penn. law professor David Skeel, who discusses the Vallejo, California, bankruptcy in his provocative new article, “States of Bankruptcy” (appearing in the University of Chicago Law Review in 2012).


States and Localities Fight Over Fracking Control

Should cities and towns control drilling for natural gas (through hydraulic fracturing, or “fracking”) as they do zoning in most states?  Or is statewide control preferable?  This recent N.Y. Times article highlights the dispute as it is playing out in Pennsylvania, where the legislature is considering legislation to assert statewide control over the practice.  For more on fracking legislation at the state level, check out this link (from July 2011) from the National Conference of State Legislatures.


Feds Sue Chicago Over Mortgage Ordinance

The Federal Housing Finance Agency, acting as conservator for mortgage giants Fannie Mae and Freddie Mac, sued Chicago in federal court on December 12.  FHFA challenges a city ordinance that requires mortgagees of vacant properties to pay a registration fee and conduct monthly inspections of vacant properties.  These requirements apply even if the mortgagee has not yet foreclosed on the property. FHFA’s suit sounds primarily in federal preemption.

Chicago’s ordinance is yet another attempt by a local government to address the fallout from subprime lending.  Cleveland, for instance, unsuccessfully sued banks for public nuisance, and Baltimore sued banks for discriminatory subprime lending based on the Fair Housing Act.  Other cities have enacted ordinances attempting to regulate or prohibit subprime lending.

The complaint in the Chicago case can be found here: