Posted on 07/26/2011 11:52:51 AM PDT by dragnet2
http://news.yahoo.com/ala-county-readies-possible-record-bankruptcy-155646239.html
BIRMINGHAM, Ala. (AP) — Alabama's largest county began laying the groundwork Tuesday for what would be largest U.S. municipal bankruptcy
Officials in Jefferson County hope to avoid new layoffs but may have to raise sewer rates or trim public services. On Tuesday, county commissioners approved resolutions to hire prominent bankruptcy lawyers and to sell bonds later in case money is needed to emerge from a Chapter 9 bankruptcy, the type that can be filed by governments.
Jefferson County's bankruptcy filing would be nearly twice as large as the record one filed by Orange County, Calif., in 1994
The county already has laid-off hundreds of workers and reduced services because of problems unrelated to the bankruptcy threat, and commissioners said they did not anticipate additional immediate reductions should the county file for bankruptcy.
The county — the state's historic economic hub with some 658,000 residents — has been trying to avoid filing bankruptcy since 2008.
Loan payments skyrocketed because of increasing interest rates as global credit markets struggled, and the county could no longer afford to repay the money. In the meantime, a string of elected officials, public employees and business people were convicted of rigging the sweetheart deals that helped put the county in dire straits.
As if the sewer debt wasn't enough, the county has another major problem: Jefferson County already has laid off about 550 of its 2,300 workers and scaled back government services because courts struck down an occupational tax and business license that provided more than $74 million annually for its operating budget. Callers to a main county telephone number now get a recording telling them the automated system has been taken out of service because of the budget and to look up department numbers the old-fashioned way, in a phone book.
Corrupt Government at all levels becomes unraveled....
This was only partially about corrupt politicians. The ultrascum bankers at JPMorgan Chase & Co. and Merrill Lynch who bribed theJeffCo politicos to float the bonds are very much to blame here...
This sad story started in 1997, it’s been discussed ad nauseam on FR and elsewhere online, and is the poster child case for regulatory reform in the muni bond market in the US.
http://www.bloomberg.com/apps/news?sid=amydMxdPh1fQ&pid=newsarchive
Make that corrupt DEMOCRAT government.....
“Make that corrupt DEMOCRAT government.....”
Yep, yep. I remember when Larry Langford was a local newscaster. Then he had a “Dreamland”...
A Black Democrat run city for over 4o+ years, if I recall.
The consept that “Elections have consequences”, is proven yet again
Wow... Horrid spelling. Fingertip dyslexia, my apologies
this bankruptcy is good - jp morgan should be the one who loses money on this - as you said, they bribed and duped the govt officials into taking the deal and the money owed ballooned when the market tanked.
let jp morgan pay.
poor little corrupt pols...they just couldn’t help themselves.
they were entrapped!
this bankruptcy is good - jp morgan should be the one who loses money on this
How is this bankruptcy good?
How jp morgan the one to lose money on this?
I doubt jp morgan holds any bonds issued by Jefferson County.
This is the county, not the city.
There were plenty of whites involved in the corruption, so I caution you with that broad brush.
Common denominator, IIRC was (D)
I live here and WANT OUT OF THIS COUNTY!
Here's how G/S and the Wall Street predators operate.
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COMING TO A TOWN NEAR YOU Mother Jones magazine circa Feb 2007 reported on the activities of Mark Florian, Chief Operating Officer of Goldman Sachs' Municipal finance division. According to the report, Florian was traveling to statehouses across the US to convince state officials that selling state assets would be "mutually beneficial." One of the scams involved selling state roads, then monetizing them via bonding----which would make billions per year for G/S until the end of time.
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HOW'S THAT G/S BONDING WORKING OUT FOR YOUR TOWN? Jefferson County, Alabama decided to build an elaborate new sewer system with the help of out-of-state financial wizards with names like Bear Stearns, Lehman Brothers, Goldman Sachs and JP Morgan Chase. The result was a monstrous pile of borrowed money that the county used to build, in essence, the world's grandest toilet — "the Taj Mahal of sewer-treatment plants" is how one county worker put it.
Now Jefferson County is one of the most indebted municipal governments in US history, with a current debt of approximately $7,000 for each man, woman and child residing in the county. Two extremely controversial undertakings by the county account for the majority of this debt.
First was a massive overhaul of the county-owned sewer system, and second was a series of risky bond-swap agreements. Both have been scrutinized by federal prosecutors, with several former county officials convicted of bribery and corruption. In 1995, Jefferson County entered into a consent decree with the EPA regarding sewer overflows into the Cahaba River watershed.
A total of $3.2 billion of new construction was subsequently contracted, both to comply with the consent decree and to expand the system to newly-developing areas and increase the number of ratepayers financing the construction. Much of this work was awarded to inexperienced companies, many of which have since been convicted of bribery, along with several county officials.
A series of controversial interest rate swaps, initiated in 2002 and 2003 by former Commission President Larry Langford (removed as the mayor of Birmingham after his conviction, were intended to lower interest payments, but have, in fact, had the opposite effect, increasing the county's indebtedness to the point that officials have issued formal statements doubting the county's ability to meet its financial obligations. The bond swaps are at the center of an investigation by the SEC.
In late Feb 2008 Standard & Poor’s lowered the rating of Jefferson County bonds to “junk” status. In early March 2008, Moody's followed suit and indicated that it would also review the county's ability to meet other bond obligations.
On March 7, 2008, Jefferson County failed to post $184 million collateral as required under its sewer bond agreements, thereby moving into technical default.......it is likely the county would enter into bankruptcy, which would result in one of the larger municipal bankruptcies in American history.”
Somewhere is the EPA in a Clinton adm????
The AL AG (a Jeff Sessions kind of AG) has set up something to represent the taxpayer, if I heard correctly this morning.
Didn’t New York City go bankrupt in the 1970s? Cleveland? If they mean, “largest COUNTY” to go bankrupt, that’s a serious omission, and still misleading since New York City is comprised of five counties.
the bankruptcy is good because the citizens of jefferson county should not be held responsible for corrupt politicians and banksters.
the bankruptcy is good because the citizens of jefferson county should not be held responsible for corrupt politicians and banksters.
So you are saying it is ok for the widows who bought the municipal bonds to carry the burden for the corrupt politicians elected by the citizens of Jefferson County?
I am not going to deny a statement you are putting into my mouth. The money isn’t there to pay these bonds. The county paid 3.2 billion for a 1.5 billion dollar job.
I don’t know who gets hurt when the bankruptcy comes, but bankruptcy is the best way out now. Do you live here?
These idiots are paying a lawyer $500 an hour to decide who gets paid. This lawyer wanted $80 million placed in one of his accounts. Sounds shady to me. Go bankruptcy.
We moved just in time. My well and septic system requires no politicians.
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