Bridgeport's decision to file for bankruptcy is important for the municipal bond market -- a significant though not entirely promising step in the country's effort to back away from municipal overindebtedness and regain fiscal control. Its progress must be tracked carefully.

Beyond that, it's not possible yet to draw many conclusions about Bridgeport's actions.

The city with 144,000 citizens (down from 156,748 in 1960) is Connecticut's most populous, and its problems are typical of many urban centers of the Northeast and Midwest. Over the past 191 years, Bridgeport grew from an agricultural town to a major manufacturing center of great smokestack corporations only to see its industry change shape in the last quarter century. Its downtown is cleaned up, rehabilitated but without much vibrancy, and some of its once mighty plants are decaying on the shore of Long Island Sound.

Driving through Bridgeport, one gets little sense of purpose about the place, though the same holds true for many modest American cities. The days when P.T. Barnum was mayor are long past, but there is a Barnum Museum of circus memorabilia. Bridgeport Brass has closed down, but its space is occupied by smaller manufacturers. General Electric, Sikorsky Aircraft, and Avco Lycoming are the largest employers, and the city is a regional banking center, "the sixth-largest in New England, "according to Mark Trinkley, acting president of the Bridgeport Economic Development Corp.

For the municipal bond market, Bridgeport's importance is its experiment with bankruptcy. It is the largest city to file so far, and the what happens next could influence the behavior of mnay financially beleaguered places. Mayor Mary C. Moran says she decided to seek this protection because her city faces a shortfall of $55 million in a $320 million budget in the next fiscal year and a cumulative gap of $288 million over the next five years.

Connecticut is fighting her action in court, however, and Richard Blumenthal, the attorney general, has warned that a bankruptcy would undermine Bridgeport's bond rating and could bar the city from the credit markets entirely.

If the courts do permit Bridgeport to file, the city may win some leeway to control its labor costs better, an important matter for bondholders. From our stanpoint, however, this route appears needlessly difficult and chancy. Better to exert an iron grip on revenues and expenses in the first place, or if the first place is already past, then now.

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