Alabama Governor Fails to Prevent County’s Record $4 Billion Bankruptcy Filing

[groovedaddy]

Last-ditch efforts by the governor of Alabama to prevent a record-breaking municipal bankruptcy in his state broke down on Wednesday, as the Jefferson County Commission voted 4 to 1 to declare bankruptcy on roughly $4 billion of debt.

After the vote, lawyers for the county filed a Chapter 9 petition in federal bankruptcy court in Birmingham, Ala., according to one of the lawyers.

At $4 billion, Jefferson County’s bankruptcy eclipses the $1.7 billion bankruptcy filing by Orange County, Calif., in December 1994, the previous record. Jefferson County’s debt grew out of poorly conceived efforts to finance a court-ordered rebuilding of its decrepit sewer system. The county used a complicated combination of debt instruments and derivatives that was supposed to save money, but it failed in 2008, leaving it with more debt than it could repay.

David Carrington, the County Commission’s president, apologized to Alabama’s other towns and counties as he cast his vote for bankruptcy. He said he knew that a municipal bankruptcy in one part of the state could harm the credit ratings of others, but he said Jefferson County simply had no other choice.

http://www.nytimes.com/2011/11/10/us/alabama-governor-fails-to-prevent-jefferson-countys-record-4-billion-bankruptcy-filing.html?ref=us

[subterranean]

1. Matt Taibbi wrote a good account of how this came about.

For those of you who missed it...

http://www.rollingstone.com/politics/news/looting-main-street-20100331

[jwirr]

2. Sounds like some of that stimulus money would have been a good

thing for this town. Oh, well congress did not think so.

[Stuckinthebush]

3. I live in Jefferson County

But in an incorporated city outside of Birmingham. The county is so screwed. I know this Bill Blount character. He's a sleaze.