Stockton, CA and other cities around the country have been issued bonds to pay their pension commitments and thus free up monies for other projects. As my colleague Steve Malagna has noted here, the bonding of pension commitments is a very risky investment strategy for cities. Stockton, which recently filed for bankruptcy, is now trying to walk away from its pension bonds. It claims that Lehman Brothers, which negotiated the bond deal wasn't fully forthcoming about the risks. As one analyst remarks, Wall Street "encouraged municipal leaders to become hedge fund managers and engage in a kind of carry trade with borrowed money." The consequences look increasingly disastrous.