Stockton, California, is bankrupt. In Detroit, a bankruptcy lawyer serving as emergency manager is trying to save the city from financial collapse. Chicago plans to close more than 50 schools to help with a $1bn education budget deficit. These and many other cities confront financial crises similar to that faced by New York four decades ago.
In the summer of 1975, I was invited by the governor of New York to join a team to help the city avoid bankruptcy. I put my investment banking career on hold and ended up serving as chairman of New York’s Municipal Assistance Corporation for more than a decade.
As a result, I found myself sitting across the table from tough, determined leaders from a world unknown to me: the world of trade unions. They included Victor Gotbaum, who led a huge municipal hospital union. We engaged in gruelling negotiations and in the process became close friends. They also included Albert Shanker, the president of the New York City teachers’ union who – an hour before the city was to file for bankruptcy – agreed to his union’s purchase of MAC bonds, which kept the city solvent. And there was Jack Bigel, a pugnacious and brilliant labour adviser who distrusted bankers but knew the city must avoid default and that we had to work together.