Jefferson County, Ala., Files Largest Municipal Bankruptcy
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(Butch Dill/AP Photo)
Jefferson County, Ala., which contains the city of Birmingham, filed for bankruptcy on Wednesday after suffering for three years from the collapse of a sewer bond refinancing. It is poised to be the largest municipal or county bankruptcy in U.S. history, reported the Wall Street Journal.
Defaulting on more than $3 billion of debt over the sewer deal, the county had come close to filing for bankruptcy months ago, but negotiated a tentative agreement with creditors in September.
The commissioners for the most populous county in the state voted Wednesday in a meeting to file for bankruptcy in a 4-to-1 vote.
Gov. Robert Bentley said he was disappointed in the filing.
“Bankruptcy will negatively impact not only the Birmingham region, but also the entire state,” he said, according to the Journal.
The county reportedly was so strapped for cash and public spending problems became so chronic that bridges were not repaired. For safety, school buses drove around them, accruing 1,722 miles in detours for an added cost of $2.5 million a year, according to Bloomberg.
Jefferson is the seventh municipality or county to file for bankruptcy this year, following Harrisburg, Pa., last month.
Since 1937, when Chapter 9 filings first became an option for municipalities, there have been only 625 filings, according to Chicago attorney James Spiotto, who has written books on the subject. Six filed in 2010.
ABC News’ Alan Farnham contributed to this report.
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I’m just waiting until it happens here in the US Virgin Islands. A friend’s electric bill before the LEAC is added is only $78, but after LEAC is added on it’s $485. The local IHOP had a one month electric bill of $22,000. Yes, twenty-two thousand dollars.
The electric company, a semi-government agency, is going to destroy our economy. Businesses are already closing. The VI government doesn’t pay their WAPA bills so the private sector is stuck being charged to make up for their non-payment. On top o fit they passed a law where WAPA couldn’t shut them off.
Posted by: Christina | November 9, 2011, 8:08 pm 8:08 pm
Maybe they can borrow more money, you know to feed that somebody owes me hand-out mentality !
Posted by: Hold On | November 10, 2011, 6:17 am 6:17 am
Jefferson County, Ala. is just the tip of the iceberg. Governments at all levels have been doling out the ‘goodies’ to get re-elected for too long – and the chickens are coming home to roost. Its is long past time for ‘the people’ to ignore both parties and do the right thing. But, they’ll probably continue voting for their free lunch. Greece has come to America – in a town near you.
Posted by: deanbob | November 10, 2011, 8:28 am 8:28 am
Matt Taibbi did a series of articles on this mess (brought to you, once again, by Goldman Sachs, et al) back in March of 2010 in the Rolling Stone. How many ways did investment banks find to screw main street over and above credit default swaps, setting up their own customers to fail and then betting on the failure? I think we are about to find out. It would be nice if more main stream media outlets would spend the time investigating these issues rather than being consumed with proving the OWS movement is just a bunch of ‘hippies.’ And for the posters on this thread who can’t bring themselves to ever criticize the criminals running our banking system because they accept without question the talking points of rightwing banking apologists and their BS about ‘market forces’ and poor people feeling entitled, these activities on the part of banks in no way represented legitimate ‘market forces.’ They were criminal enterprises and cons. That’s not what any early capitalist envisioned for the market, so if you really support a free market, stop supporting the people who are doing everything in their power to manipulate and cheat the freedom right out of it.
Posted by: Pongo | November 10, 2011, 10:41 am 10:41 am
Mr Pongo is right on the money.
Posted by: livesinJeffCo | November 10, 2011, 1:02 pm 1:02 pm
No gender bias intended.
Posted by: livesinJeffCo | November 10, 2011, 1:02 pm 1:02 pm
History is being scrubbed from (newer) textbooks and the internet. If we don’t learn … we are doomed. Both parties are ultimately responsible for our problems. Why are so few being prosecuted?
Posted by: deanbob | November 11, 2011, 12:33 pm 12:33 pm
POSTED BY: PONGO | NOVEMBER 10, 2011, 10:41 AM 10:41 AM. You however forgot that Fannie and Freddie started the mess, with the blessing of Frank and Dodd, but you don’t have a problem with that. The OWS now has morphed into a destructive movement which purpose now is to create mahem, caos and destroy.
Posted by: Lizzie | November 15, 2011, 10:31 am 10:31 am