Intervention bankruptcy – essentially combining federal bankruptcy and state involvement – could strengthen government's ability to manage municipal insolvency, according to the Manhattan Institute for Policy Research.

"Intervention bankruptcy is an attractive alternative to reforming Chapter 9," senior fellows Daniel DiSalvo and Stephen Eide wrote in "When Cities are at the Financial Brink," a report the free-market leaning think tank issued Thursday. "Intervention bankruptcy requires no change in federal law."

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