Leading with fear is not the way to greatness.
Dec. 10--A group of powerful bondholders joined the fight against CalPERS today as the pension fund tries to sue the bankrupt city of San Bernardino.
The city's bondholders and the company that insured the bonds filed a 114-page protest in U.S. Bankruptcy Court, objecting to CalPERS' attempts to sue the city.
CalPERS is owed about $6.9 million by the bankrupt city and has asked the court for permission to sue. Ordinarily, a bankruptcy filing shields a debtor against all litigation.
The San Bernardino case is shaping up as a huge test of CalPERS' muscle and the sacredness of public pensions. CalPERS has long taken the position that its member cities and counties have to make their pension contributions, regardless of their finances. The bondholders, who are owed millions by the city, said CalPERS is trying to get preferential treatment.
CalPERS "ignores every other entities' interests," the bondholders said in their court filing.
Among the companies objecting is National Public Finance Guarantee Corp., a bond insurance company. National Public is also fighting with CalPERS over the Stockton bankruptcy, objecting to the city's insistence on paying its pension obligations while other creditors lose millions.
(c)2012 The Sacramento Bee (Sacramento, Calif.)
Visit The Sacramento Bee (Sacramento, Calif.) at www.sacbee.com
Distributed by MCT Information Services