The former chairman of Goldman Sachs once called Pension Obligation Bonds "lousy public policy."

They're "the dumbest idea I ever heard. It's speculating the way I would have speculated in my bond position at Goldman Sachs," said Jon Corzine, who left Wall Street to serve as governor of New Jersey.

In retrospect, Detroit and Stockton, California, might agree. POBs, first deployed by the City of Oakland, California, in 1986, played a prominent role in the bankruptcies of both cities.

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