didn't know Orange went bankrupt in '94 until now.. but jefferson didn't do it with Disneyland and Newport Beach in its boundaries. Wow that seems like it must've been a clusterfark :P

OC went bankrupt because they hired a treasurer that basically gambled it away. he was very popular because he would "magically" produce such large gains every year. turns out he was betting more than 200% of the counties money. at one point, it was so profitable he had to hide the gains. finally, he bet the wrong way and the county got a margin call. he was convicted of "making elected officials look stupid" and did community service. his stance was that he let them knew all along what he was doing, but since everyone believes accounting is akin to wizardry, he got thrown under the bus.

I was wondering when the article was going to get around to the fact that the politicians had lined their pockets at the expense of JeffCo residents. At first they made it sound like it was all due to a bad economy, when in reality it was the mayor, city council, and other folks skimming money out of the funds. Jeffco sewer customers and the banks are left in a mess, and those dirtbags won't be in cushy prison cells long enough, IMHO.

Sewer-debt crisis

Sounds like a shiatty crisis. Talk about your "toxic debt"!

Hopefully the county has already done the legwork to file a plan substantially similar to the September agreement with creditors. The longer this drags out the worse the pain since they're stuck paying default rates on the bank warrants as revenue bonds aren't subject to a stay.

JeffCo residents better brace themselves for the likely 8-10% annual sewer rate increases for the foreseeable future.

Tergiversada: I was wondering when the article was going to get around to the fact that the politicians had lined their pockets at the expense of JeffCo residents. At first they made it sound like it was all due to a bad economy, when in reality it was the mayor, city council, and other folks skimming money out of the funds. Jeffco sewer customers and the banks are left in a mess, and those dirtbags won't be in cushy prison cells long enough, IMHO.

Did officials literally take funds for themselves, of did they just get kickbacks from JPM Chase for agreeing to the interest-rate swap? The latter probably would have done more damage anyway.

Arkanaut: Tergiversada: I was wondering when the article was going to get around to the fact that the politicians had lined their pockets at the expense of JeffCo residents. At first they made it sound like it was all due to a bad economy, when in reality it was the mayor, city council, and other folks skimming money out of the funds. Jeffco sewer customers and the banks are left in a mess, and those dirtbags won't be in cushy prison cells long enough, IMHO.

Did officials literally take funds for themselves, of did they just get kickbacks from JPM Chase for agreeing to the interest-rate swap? The latter probably would have done more damage anyway.

They got kickbacks from JPM, the cost of which were built into the swap spreads, allegedly.

YouSirAreAMaroon: Arkanaut: Tergiversada: I was wondering when the article was going to get around to the fact that the politicians had lined their pockets at the expense of JeffCo residents. At first they made it sound like it was all due to a bad economy, when in reality it was the mayor, city council, and other folks skimming money out of the funds. Jeffco sewer customers and the banks are left in a mess, and those dirtbags won't be in cushy prison cells long enough, IMHO.

Did officials literally take funds for themselves, of did they just get kickbacks from JPM Chase for agreeing to the interest-rate swap? The latter probably would have done more damage anyway.

They got kickbacks from JPM, the cost of which were built into the swap spreads, allegedly.

I wish the article went into more detail on why the swap didn't effectively hedge the variable rate interest on the debt. Was the swap tied to some other rate other than muni rates?

And the SEC dinged JPmorgan $722m on this deal alone? That $722m would go along way in reducing jeffco's debt.

Debeo Summa Credo: YouSirAreAMaroon: Arkanaut: Tergiversada: I was wondering when the article was going to get around to the fact that the politicians had lined their pockets at the expense of JeffCo residents. At first they made it sound like it was all due to a bad economy, when in reality it was the mayor, city council, and other folks skimming money out of the funds. Jeffco sewer customers and the banks are left in a mess, and those dirtbags won't be in cushy prison cells long enough, IMHO.

Did officials literally take funds for themselves, of did they just get kickbacks from JPM Chase for agreeing to the interest-rate swap? The latter probably would have done more damage anyway.

They got kickbacks from JPM, the cost of which were built into the swap spreads, allegedly.

I wish the article went into more detail on why the swap didn't effectively hedge the variable rate interest on the debt. Was the swap tied to some other rate other than muni rates?

And the SEC dinged JPmorgan $722m on this deal alone? That $722m would go along way in reducing jeffco's debt.

The bonds were hedged with LIBOR but there were also swaps that took care of the basis (difference between LIBOR and BMA, which the bonds were indexed to). The swaps performed as expected, the problems arose when the rates on the bonds increased due to technical default caused by the downgrade of the insurers, failures in the auction market, and the subsequent draw on liquidity facilities forcing the liquidity banks to hold bonds on thier balance sheets.

These are the type of crimes that should have the death penalty attached.

/their

The $700mm+ was termination fees from the swaps that JPM forewent. JeffCo never paid those fees so they were never out that $$.

The good old corrupt Democrats really did a good one this time, didn't they? This is what happens when you let Democrats have complete control of a city, it turns into a 3rd world nation and goes bankrupt. Anyone from B'ham knows this is the truth.

So we link to problematic financing of cities when it is tied to a bank.... Yet ignore the more common reason of pension problems like in Vallejo, CA...

This one has been getting the Matt Taibbi treatment for a couple of years. Link (new window)

Small-time crooked officials combined with sophisticated soulless Wall Street banks are quite the combination. (Substitute Greece and Portugal for Jefferson County and you have the same thing on a country scale.)

dutchmang: This one has been getting the Matt Taibbi treatment for a couple of years. Link (new window)

Small-time crooked officials combined with sophisticated soulless Wall Street banks are quite the combination. (Substitute Greece and Portugal for Jefferson County and you have the same thing on a country scale.)

In reality the shenanigans around the financing were small potatoes relative to the graft surrounding construction.

All the big money was made with the typical bid rigging and union payoffs of most government projects of scale, but apparently that story doesn't sell magazines like z0mg b4nkst3rz!!!!1!!11

lordaction: The good old corrupt Democrats really did a good one this time, didn't they? This is what happens when you let Democrats have complete control of a city, it turns into a 3rd world nation and goes bankrupt. Anyone from B'ham knows this is the truth.

Please, Republicans and Dems in this state are both crooked cheats.

The Republicans just have better marketing.

Seriously, any outside group looking at Alabama's government would call it what it really is-a criminal racket.

lordaction: The good old corrupt Democrats really did a good one this time, didn't they? This is what happens when you let Democrats have complete control of a city, it turns into a 3rd world nation and goes bankrupt. Anyone from B'ham knows this is the truth.

You're either an idiot to imply that this is the fault of the Democratic party, or you're a bigot by using "Democrat" in as a typically Southern euphemism for "uppity negro". Either way, you're hardly worth more than a passing insult...

/ignore

wmoonfox: lordaction: The good old corrupt Democrats really did a good one this time, didn't they? This is what happens when you let Democrats have complete control of a city, it turns into a 3rd world nation and goes bankrupt. Anyone from B'ham knows this is the truth.

You're either an idiot to imply that this is the fault of the Democratic party, or you're a bigot by using "Democrat" in as a typically Southern euphemism for "uppity negro". Either way, you're hardly worth more than a passing insult...

/ignore

You don't know what you are talking about. I've lived in Jefferson County (where this happening) since the 90's. The city is ruled by a corrupt, Democratic core. Go do the ignore thing so you can hide yourself from reality. And your party base wonders why people think Democrats are idiots...

What an interesting and informative well written article.

Are you reading something else or is this just knowledge of the stuff that went on before? I'm only seeing a one sentence news snippet.

How big is that county and is all 3 billion from the sewer system?

The truth is the voters of Jefferson county have been electing openly corrupt officials for a couple of decades.

Larry Langford is exhibit A. Consider:

Visionland
The sewer fiasco
the XO laptops
Ryan Idol

He never held a government post that didn't end in financial ruin for the entity, and yet he regularly got elected to higher posts. Mayor of Fairfield, county commission chair, Mayor of Birmingham (even though he lived in Fairfield).

His failures are EPIC. His federal conviction and removal was the only thing that kept him from completely bankrupting Birmingham and yet if he could run today they would elect him again.

Anything formerly worth having in Jefferson county moved to Shelby at least a decade ago. The place can't be saved.

lordaction: The good old corrupt Democrats really did a good one this time, didn't they? This is what happens when you let Democrats have complete control of a city, it turns into a 3rd world nation and goes bankrupt. Anyone from B'ham knows this is the truth.

I know you're trolling, but I think it's worth pointing out that several members of both parties were involve in this clusterfark-- many of whom are now in prison. Some are still free, likely due to a lack of evidence for now. It includes one current U.S. Congressman (Spencer Bachus), who after receiving some nice hefty funds from JPM Chase decided to throw JeffCo and his own constituents under the bus. And after the odd way the governor has been behaving I wouldn't be shocked to see that he has a dog in this fight, too. WSJ has been running some great articles on this over the past few years.

I submitted a couple of other articles on the subject that didn't get greenlit. Granted, I'm not that great at witty headlines. But this article in particular does no justice for just how farked up the entire scandal is and how many people are involved. It even includes the guy who co-wrote the Alabama immigration law. So here they are, just to give you a very small taste:

A timeline of events (new window)

Just some of the wackiness that actually is linked to the whole mess. (new window)

/Subby

The details on the trial of Larry Langford are also quite entertaining if you'd like to Google that. You may also want to Google Langford. His shopping addiction is the least interesting thing about him.

dutchmang: This one has been getting the Matt Taibbi treatment for a couple of years. Link (new window)

Small-time crooked officials combined with sophisticated soulless Wall Street banks are quite the combination. (Substitute Greece and Portugal for Jefferson County and you have the same thing on a country scale.)

Thank you! I was looking for that link, earlier! It doesn't quite cover everything (likely due to just how much there is to cover on the situation), but it does tie in quite a few things that you'd otherwise miss.

lordaction: You don't know what you are talking about. I've lived in Jefferson County (where this happening) since the 90's. The city is ruled by a corrupt, Democratic core. Go do the ignore thing so you can hide yourself from reality. And your party base wonders why people think Democrats are idiots...

Gary White and Mary Buckelew and Bettye Fine Collins would like to have a word with you, among others (and you might want to take a look at that Rolling Stone piece). Langford and Smoot are pretty darn bad, but they had some help.

JustGetItRight: Anything formerly worth having in Jefferson county moved to Shelby at least a decade ago. The place can't be saved.

Not everything. Some of it moved to St. Clair County.

lucksi: What an interesting and informative well written article.

Are you reading something else or is this just knowledge of the stuff that went on before? I'm only seeing a one sentence news snippet.

How big is that county and is all 3 billion from the sewer system?

The full article didn't sumit for some reason, but it's linked directly beside the snippet. Here ya go. (new window)

As a resident of Jefferson County and Birmingham proper (not Over The Mountain)
I'll probably end up moving to St. Clair County, maybe live by the water, or
Shelby County when my girlfriend finishes her degree. Sure, Shelby County is
bland subdivisions, strip malls, and soul-less architecture, but the cost of
living is cheap. Now, living in a modest 2 bedroom apartment, a shower a day,
flushing the toilet, and a couple of loads of laundry a week, my water/sewer
bill is $69.00-$96.00 a month. It has been in the $90.00 range the
past 4 months. Contrast this to my parents a couple of counties over who have
3 people, a huge house, hot tub, lawn they water regularly, and 4 bathrooms.
They pay less than $40.00 a month for water/sewer.

Birmingham is also not the safest city, especially North Birmingham. I'd hate to
be there after nightfall, think Detroit, maybe worse. It's discomforting driving
through there during the day. You can tell that during the mid 20th century some
of the places in North Birmingham were opulent mansions, but now they look like
someone set off a bomb in and around them, and they're surrounded by blight. You
think I'm exaggerating a little? I'm really not. I live in Southside so
murders are rare, just the occasional petty theft and vandalism.

In my opinion, not being native born to the area, Birmingham appears to have
stagnated around 1980 with the election of Richard Arrington Jr. as mayor,
and has culturally been on a slow downward spiral ever since. It's well known
(or suspected) the Birmingham-JeffCo politicians are corrupt, but they are
continuously re-elected by the majority. I believe this is done out of either
reverse racism, white guilt (partially), or resentment over trespasses of the
past, namely The Civil Rights Movement.

Regardless, this will not be good for any municiplities in Jefferson County.


/enough ranting
//writes Birmingham Water Works a check for $96.86

bhamtown

Holy crap, dude! My water bill last month was in the $30 range. We live just over the St. Clair County line North of Trussville in Argo. I grew up in Pleasant Grove. That being right next door to Fairfield (where I used to work), I'm familiar with the handiwork of Larry Langford & Co.

The good news for you is that homes just over the county line in either direction are going to run you pretty cheap. You can get a decent home in the $140-160 range, and the apartments aren't too bad, either. Plenty of shopping, pharmacies, and grocery stores (6-7 grocery stores around me, unless I'm forgetting someone). Taxes are lower. Lines are shorter. Close to St. Vincent's East. Only thing is that you're looking at roughly a 30 minute commute into Birmingham if you work there. Hubby usually makes it in about 20 minutes unless traffic is bad.