House Speaker Newt Gingrich met with Washington D.C. Mayor Marion Barry today, as congressional auditors reported that the nation's capitol is "insolvent." Congress' General Accounting Office reports that the city already is unable to pay some bills, and will run out of money this summer as hundreds of millions of dollars worth of deferred Medicaid payments and other obligations come due. The city council is preparing to lay off thousands of workers to try to close a $772 million budget gap. Washington has limited home rule, with congressional oversight, because it is a district and not part of any state; a federal takeover has been floated because of the fiscal mess. The local news, meanwhile, is having a global impact: Masahiri Ymaguchi, a top Tokyo banker, told the Associated Press that the dollar fell against the Japanese yen today because of Washington's problems. TIME Washington correspondent Ann Blackman reports that Congress will probably set up an independent financial review board to oversee city spending. She says Barry planted the seeds for the crisis years ago by building a huge bureaucracy, with more full-time employees per capita than any of the 50 states.