This chapter begins with a discussion of the different analytical models associated with fiscal and financing crises. It offers an explanation of the structural dynamics of the New York City crisis by focusing on the options and strategies available to the major actors in the crisis–namely, the city, the banks, the public employee unions, and the state and federal governments. The chapter reviews the solution imposed and of the institutional and political changes that have resulted from it. The politics of fiscal crisis are the incremental politics of coalition-building, bargaining, and logrolling by which politicians govern diverse cities. The necessary condition for a fiscal crisis is borrowing, and for United States cities this means ready access to the municipal bond market. The chapter concludes with an examination of how the controversial means used to resolve the New York City crisis may have affected the structure of municipal finance and the specific alternatives available to other cities facing similar fiscal distress.