Lessons from the U.S. Municipal Bond Cases?

In a sovereign debt crisis, a government will sometimes argue that the country does not have to pay some of its debt, because it borrowed the money in violation of its own law, typically while a different government was in power. And in fact, domestic law typically does constrain the borrowing of countries and sub-sovereigns: debt ceilings, legislative approval requirements, etc. Many foundational -- though now, largely forgotten -- legal cases involving such disputes arose in the context of U.S. municipal debt. In the mid to late 1800s, the U.S. Supreme Court decided literally hundreds of the cases, often ruling in favor of the municipality. Vincent Buccola and his co-author Allison Buccola wrote a wonderful article, The Municipal Bond Cases Revisited, reconstructing these cases. Vincent join us to talk about their findings and the implications for modern disputes (e.g., Puerto Rico).

Producer: Leanna Doty