Quote Originally Posted by lilpup View Post
President Ford originally refused to bail out New York [[the famous "Drop Dead" headline) because he felt the city hadn't adequately addressed and reformed its budgetary issues. After the city was thus forced to seriously change things and produced results to Ford's satisfaction he granted the funding.
New York State stepped in a massive way, forming the Municipal Assistance Corporation which sold $10 billon dollars in bonds to prevent NYC from going broke. In exchange, the city massively improved its financial controls and budget process. I do not think the US government participated in the bailout.