San Bernardino, a southern California city of more than 200,000, recently declared bankruptcy. Municipal bankruptcies are rare, but not unprecedented.
Vallejo, Calif., in the San Francisco Bay area, for instance, filed for bankruptcy protection in May 2008. Jefferson County, Ala., sought bankruptcy protection in November 2011. And Stockton, Calif., population 300,000, filed for bankruptcy on June 26, after essentially spending itself out of business. Other cities, including Harrisburg, Pa., also stand at the brink.