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I live in Birmingham, so I need to correct a couple things. First, the "illegal" tax has been around a long time. In this particular case, it was overturned on a technicality [1]. However, because the state government is hostile to Birmingham, it has been impossible to replace the lost revenue. However, that's relatively unimportant, because the sewer budget is separate, and funded only by sewer system revenues. Secondly, the construction problems, common among massive public projects, really weren't the problem. The problem is that County Commissioners were BRIBED by bankers into taking out unwise interest rate swaps in 2003. I believe all five commissioners from that period have been convicted of corruption, particularly Larry Langford, commission president. [2] The reason for the bankruptcy is less that interest rates rose, but primarily the freezing of the market for municipal bonds during the 2008-2009 recession. Bloomberg explains, "After some bond insurers incurred losses on subprime- related securities, threatening the credit ratings they used to guarantee other Jefferson debts, investors in 2008 dumped the sewer securities on banks that had agreed to act as buyers of last resort. That triggered contractual requirements for the county to pay off $850 million of the debt in four years instead of the 30 or 40 under the original agreements, according to government records." [3] So it is clear that BOTH bankers and our local politicians are at fault for this problem. Both acted illegally. Our politicians are in jail, but the guilty bankers are not. So, yes, I think JP Morgan should pay a substantial penalty for this. 1: http://blog.al.com/spotnews/2011/03/alabama_supreme_court_ru...
2: http://www.inthepublicinterest.org/case/jp-morgan-investment...
3: http://www.bloomberg.com/news/2011-11-09/alabama-s-jefferson... |