Mayor Abraham D. Beame and representatives of New York City's major banks moved to day to break an impasse that had developed over how the city will repay $1 billion due to city noteholders subject to a moratorium overturned by the courts.
After a two-hour afternoon meeting at the Mayor's Gracie Mansion residence, a joint statement was issued indicating the banks have backed off their previous requirement that some oversight mechanism be established to control the city's finances if they are to participate in a new underwriting. That along with other reported requirements was viewed by Beame as an intrusion by the banks into the political sovereignty of the city.
The city, for its part, has agreed to work with the banks and "non-bank financial advisors" to come up with a way to market a new city bond that would be acceptable to public investors, leaving open the possibility of some independent authority watching over the city that would reassure investors they would eventually get repaid.
"We were all on the same wave-length in terms of the need for a new city bond that could be marketed," Beame told reporters after the meeting.
And the bankers, who have been painted as trying to dictate the affairs of the city in return for their corporation in once again keeping New York City fiscally afloat, appeared equally conciliatory after the session with the mayor and his advisers.
"It was a very satisfactory meeting," said Alfred Brittain, chairman of Bankers Trust Co. and current head of the association of 11 New York City Clearing House banks. "I know it's popular to say it was constructive, but this was exceedingly constructive."
Also attending the meeting was Citibank chairman Walter Wriston and top officials of Morgan Guaranty Trust Co. and the Chase Manhattan Bank.
The city must file a plan with the New York State Court of Appeals by Feb. 3 that will specify how the city plans to repay the $1 billion due to noteholders. The court in November held the moratorium was unconstitutional.
The city has devised a plan to raise the money, which would include $250 million from the sale of mortgages on city-owned housing, $200 million from a stretch-our in repayment of $1 billion in debt the banks now hold, and over $500 million to be raised in the public markets.
Originally this public financing was to be done through a few bond issue from the Municipal Assistance Corp., a state agency set up last year to help the city borrow funds after it found itself closed out of the money market.