Ec Professor Says Bankruptcy Would Be Best For NYC

New York City's bankruptcy would be a disaster for the nation but beneficial to the city itself, John R. Meyer, 1907 Professor of Transportational Logistics and Distribution, said yesterday.

Default supervised under a federal court referee could allow great flexibility and latitude in dealing with the city's manifold problems, said Meyer, who teaches graduate-level courses on urban economics and public financing in the Department of Economics and at the Business School.

But bankruptcy could be a national danger, he added, in that it would probably require the large banks that own a substantial amount of the city's bonds to take a loss on these holdings.

Meyer said the effect of the city's default could be to weaken these institutions' capacity to provide loans necessary for economic growth throughout the country.

Only now that the Senate Banking Committee is considering extending federal loan guarantees to the city has "hard headed pragmatic thinking" begun to replace politics and value judgments in discussing the city's future, he said.