California's Bankruptcy Cocktail

In the span of just 14 days, three California cities have opted to file for Chapter 9 bankruptcy protection. San Bernardino, population 209,000, part of the Southern California region known as the Inland Empire, is the second largest city in recent history to file for bankruptcy after city leaders there voted Tuesday to seek protection in the face of a $46 million deficit.

That puts San Bernardino in company with Stockton and Mammoth Lakes, the two other California cities to seek protection in recent weeks. San Bernardino and Stockton, as well as 2008 Chapter 9 filer Vallejo, took similar routes to reach fiscal calamity: overly excited spending during the boom years followed quickly by the recession, a high rate of foreclosures, and topped off with employee payment and pension obligations that outpaced plummeting tax revenues. Mammoth Lakes is the outlier here, with its bankruptcy resulting from its inability to pay the judgment of a development-related lawsuit.