It is also good to note that some in Congress aren’t sitting on their hands here:

Federal lawmakers, troubled by the rising payouts, are trying to limit the damage to municipalities and prevent them from falling prey in the future. Pending legislation in Congress, introduced by Representative John Lewis (D-Ga.) and Senator Robert Menendez (D-N.J.), would impose a 100% tax on termination payments like those in the CTA deals to dissuade banks from going after struggling municipalities. Another proposal would limit the use of derivatives by localities with less than $50 million in assets; lawmakers figure small towns and cities don’t have the resources to vet the risks of exotic investments adequately.

The progress of that legislation will be worth watching, although it’s unclear if even people with $50 billion in assets have the resources to vet such things adequately.

Great job by BusinessWeek.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.