Thursday, November 10, 2011

Alabama's Jefferson County Declares Biggest Municipal Bankruptcy

Jefferson County, Alabama, announced the largest U.S. municipal bankruptcy in history, ending more than three years of legend, became Wall Street's biggest casualties of the credit crisis.

Alabama's most populous county move came yesterday after state legislators failed to return to a JP Morgan Chase, the sewer system more than $ 3 billion in debt will be reduced by agreement in September, led by the creditor. Governor Robert Bentley, and local leaders rally to support the work of two months, the agreement fails, fall apart anyway.

Commissioner Joe Knight said: "We have reached the last resort," bankruptcy yesterday before the meeting 4-1 vote. "We can continue to kick this can down, but I think the people of Jefferson County have had enough."

Chapter 9 filing leaves creditors including JP Morgan Chase, the largest U.S. bank by assets, is facing hundreds of millions of dollars in losses, and may revive the default value may rise 2.9 trillion municipal bond market's attention. This is also the county's Birmingham, Alabama's largest city residents, more than sewage expenses, debt led to the collapse of many, they may face uncertainty.

Agreement in September to provide $ 1.1 billion in benefits. It is also known as the sewer rate of 8.2%, the burden of concern for the poor against the local legislators an annual increase of three years. The county also can not get the creditors to sign the pledge, said Committee Chairman David Carrington. Sewer fee scale an obstacle, as many residents, especially in Birmingham, can not afford higher costs, according to Commissioner George Bowman, the two counties he represents one of the poorest, the only vote on the bankruptcy one vote. He said that nearly 70% of the sewer users living in the two lowest-income areas.

Bentley, the Republican Party, said he was the county's move to seek court protection disappointed.

"Jefferson County sewer debt crisis has been hampered by the country's economic growth, and filed for bankruptcy protection, it will be a greater challenge to overcome," he said in a statement. "Now we must rise to this new challenge, to advance to the Birmingham area to bring economic growth and stability, and do our utmost to all restrictions on the impact of this decision."
Jefferson's legacy of political corruption, bankruptcy, a tenacious sewer project. In 2009, JP Morgan Chase agreed to settle with the county politicians, bankers said to people who can win the business to pay $ 722 million, compared with the Securities and Exchange Commission. Former Director - Larry Langford convicted, charged with accepting bribes and inspired by elements of the Dodd - Frank behind the legal protection financing of municipalities trick.

2008, set up by JPMorgan derivative laden refinancing subprime mortgage market opened from the aftermath of the collapse spread to Wall Street, sending the cost of debt soared. Crisis, the stimulus led to some county residents and businesses filed for bankruptcy, rather than the individual to bear the full cost.

Member of Jefferson's efforts to close the sewer debt settlement deal with investors who do not want to restructuring proposals under the terms of the agreement the recent bond sales setback, according to the filed for bankruptcy protection.
Morgan did not want the county into bankruptcy, the bank spokesman said Justin Perras. The company as of May more than $ 1.2 billion held in the county sewer debt, according to Bentley's office in the September document. Under the proposed settlement provides $ 7.5 million in concessions.


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