Skip to comments.Blame all around for biggest U.S. municipal bankruptcy
Posted on 11/11/2011 3:35:59 AM PST by 1010RD
(Reuters) - From corrupt and incompetent local officials to Wall Street's credit crisis and toxic bonds, there was plenty of blame to go around on Thursday, a day after Alabama's Jefferson County declared the biggest municipal bankruptcy in U.S. history.
The county, once a leading industrial hub in the U.S. Deep South, filed for bankruptcy court protection after failing to reach final agreement on terms of a preliminary deal with creditors led by JPMorgan Chase & Co in September to settle $3.14 billion in sewer-system debt. [Read the whole story]
(Excerpt) Read more at reuters.com ...
Jefferson County's debt escalated in the mid-2000s when bond issuance deals to upgrade its sewer system soured amid widespread corruption, bribery and fraud charges that led to some 22 convictions.
Costs ballooned as interest rates rose, and the county had teetered on the edge of insolvency since its debt was downgraded in 2008...Larry Langford, a Democrat and former mayor of Birmingham, was sentenced to 15 years in prison last year for his role in corrupt business deals that fueled the multibillion-dollar sewer debt. Langford presided over the county commission during the height of the bond swaps that led to the run-up of the massive debt.
Don't let Democrats touch your money.
JPMorgan, which has said it wanted to avoid bankruptcy, has already paid more than $75 million and waived about $647 million in fees as part of a settlement with the U.S. Securities and Exchange Commission over charges of fraud in connection with Jefferson County's sewer debt.
What tax payers need to know is:
1. Bonds are simply future taxes.
2. Government spending and corruption are Irish twins.
Also note that BKing isn’t going to be easy or pleasant.
NB: ‘The bankruptcy judge rules on the plan, ultimately deciding whether it’s in the best interests of creditors and is feasible.’
Look, we've been managed by criminals and incompetent boobs for years. When the bubble finally burst, it was the Republicans in the State Legislature and the Governor who had a responsibility to raise taxes to fix it. They didn't.
It's as simple as that.
To the best of my knowledge, the convictions were all for accepting bribes.
Nobody was ever convicted of offering a bribe.
Wouldn't it make sense that if one person illegally accepted a bribe, then another person illegally offered a bribe?
But nobody was ever convicted of offering a bribe.
Big RAT city full of welfare leeches and bankrupt go together like peas and carrots. - Forest Gump.
Coming soon to a DIM-run city near you...
Don’t let Democrats touch your money.
The less money stolen from producers, that government has, the less likely they are to be in a position of infinite power over the same producers.
Meaning: Don’t let democrats, republicans, or any such political entity, get their hands on your money. You will ultimately regret the power you have given them.
PS, I love how it is the legislatures fault!!!!!!!!!!
...and somehow they just happen to be Republican. So the
first question I have is: How is the state budget doing?
I don’t know, but it could be case closed.
Back in the early 1990s, the county's sewer system was so antiquated that it was leaking raw sewage directly into the Cahaba, which also supplies the area with its drinking water. Joined by well intentioned citizens from the Cahaba River Society, the EPA sued the county to force it to comply with the Clean Water Act. In 1996, county commissioners signed a now-infamous consent decree agreeing not just to fix the leaky pipes but to eliminate all sewer overflows a near-impossible standard that required the county to build the most elaborate, ecofriendly, expensive sewer system in the history of the universe. It was like ordering a small town in Florida that gets a snowstorm once every five years to build a billion-dollar fleet of snowplows.
Yikes! Great catch and in keeping with the theme. When Perry said he’d eliminate the EPA my heart leaped with joy.
They’re dangerously destructive. Their overreach is destroying our economy.
True. One thing I note about government employees is that they couldn’t make it in the private sector.
Money’s like holiday candy to them. It is provided by somebody else and it just shows up and never runs out. Few people ever get to manage millions or billions let alone tens of thousands of dollars. That inexperience and the foolish belief that a million dollars is a lot of money cause only half the problems with government.
The other half is corruption, ie spending OPM not like you spend your own.
Great post;comments;thread. Lots of lessons to be learned here.
DEFUND socialist collectives, foreign and domestic. DISMANTLE UNaccountable bureaucracies (more socialism). DON’T vote or spend yourself into bankruptcy.
How about automatic life/death sentences for elected politicians convicted of embezzlement, bribery, etc., etc.
We need to make it toxic for these totalitarians to touch OPM (Other Peoples Money)
Another one of “Holder’s People”
Felony conviction and sentencing
On the morning of December 1, 2008, Larry Langford was arrested by the FBI on a 101 count indictment alleging conspiracy, bribery, fraud, money laundering, and filing false tax returns in connection with a long-running bribery scheme. He was led into the courtoom in leg-irons. Also indicted were lobbyist and former state Democratic Party executive director Al LaPierre, and Montgomery investment banker and bond underwriter, and former state Democratic Party chairman, William B. Blount of Parrish & Co.
While Langford was head of the Jefferson County commission, he engaged in a variable rate auction and bond swaps to raise money to help improve the county’s sewer system. Langford was convicted of receiving $235,000 in bribes from Blount, some routed through Al LaPierre, to help influence the bond deals. According to the indictment, William Blount helped Langford receive a $50,000 loan, which was used to purchase jewelry, including a Rolex watch, and designer clothes. Blount’s firm earned $7.1 million in fees from the bond deals while LaPierre was paid $219,500 by Blount for his help the scheme. Jefferson County banks made approximately $120 million by encouraging the county to refinance nearly all of its bonds using swaps. The bonds resulted in a $3.2 billion sewer debt, contributing to the Jefferson County commissioners voting to declare bankruptcy on November 10, 2011 in what will be the largest municipal bankruptcy in U.S. history. The government is currently seeking $7.6 million in forfeiture from the three men.
After being convicted in a trial in federal court in Tuscaloosa, Alabama, Langford is now serving a 15 year federal felony sentence. He is an inmate #27349-001 at FCI Ashland, a Federal prison in Ashland, Kentucky. His projected release date is listed as May 1, 2023.
Langford was convicted of receiving $235,000 in bribes from Blount, some routed through Al LaPierre, to help influence the bond deals. According to the indictment, William Blount helped Langford receive a $50,000 loan, which was used to purchase jewelry, including a Rolex watch, and designer clothes. Blounts firm earned $7.1 million in fees from the bond deals while LaPierre was paid $219,500 by Blount for his help the scheme. Jefferson County banks made approximately $120 million by encouraging the county to refinance nearly all of its bonds using swaps. The bonds resulted in a $3.2 billion sewer debt, contributing to the Jefferson County commissioners voting to declare bankruptcy on November 10, 2011 in what will be the largest municipal bankruptcy in U.S. history. The government is currently seeking $7.6 million in forfeiture from the three men.
Blame “all around”????? B.S. The answer is very easy. Too much spending. Contracts that are too rich. Contracts that don’t have de-escalation clauses in the event of lower revenue, or that can’t be renegotiated because they are locked in. All because municipal administrators are more interested in doling out the $$$$$$ to their union and crony-captialist buddies than actually running the municipality.
“PS, I love how it is the legislatures fault!!!!!!!!!!”
Only when they are controlled by the GOP. It’s never the crooks fault. It’;s amazing what a downfall in tax monies uncovers.
There are too many “golden sewer” stories for this to be by chance. Dems/enviros have seen this as an opening to make a lot of money for themselves.
In a project like this, the EPA had to be there.
When Perry said hed eliminate the EPA my heart leaped with joy.
He was either lying to get elected or a total idiot (which despite his debate performances, I doubt). There are thousands (literally) of Federal court consent decrees ordering the government to "comply" with what the corrupt bureaucracy wants to do anyway, whether pursuant to the Clean Water Act, the Endangered Specious Act, the ADA... ALL with underlying treaties to give them teeth. NONE of this spending is discretionary. ALL of it is corporate and bureaucratic welfare. He could "eliminate" the EPA, but he would have to reconstitute it in some other form. In either case, it's bull.
Their overreach is destroying our economy.
You bet it is. I've been trying to tell FReepers what it's going to take to beat this system for TEN YEARS and most still think this is a matter of ideology. Instead they listen to the bogus promises of "leaders" and get all warm and fuzzy. It's crap. This is going to be a very long legal and technical battle that must be won or we will be trapped (literally) in an urban prison with the country ripe for the taking (as intended).
“When Perry said hed eliminate the EPA my heart leaped with joy.”
Except he didn’t. As he struggled for an eternity to name his third department he wanted to close, someone else suggested EPA....then Perry said it....and then retracted saying that that wasn’t the right department. He finally later said it was “Energy” department he was trying to think of.
Here in Pittsburgh the problem is even worse. The few breathing Republicans we have here have been totally co-opted, since most of them make their money somehow in the muni bond market.
And while Larry is getting 3 squares a day, a roof over his head, running water, heat and AC at Club Feb, the property owners of Jefferson County are where until 2023?
That's tough. The incentives are there and so is human nature. The electorate wants to believe in something for nothing.
The only solution I see is to undo government education. That said I cannot see it happening quickly. Utah rejected vouchers just a few years ago.
We need to approach government education like we do abortion or gun control. Show the damage it does. Why is there so much un/underemployment? Bad educational outcomes - poor K-12, dumb useless degrees exacerbated by government loans and high tuition. You're poor, young person, because of government.
That's the only way.
OWS sure is in need of ed jew k shun. If they had any brains, we would see them camped out at the capitol in DC and in every state capitol, and lobbying for spending cuts left right and center. Like that is ever going to happen.
Some used to think the “Wall” would never come down. So things could change, if other “things” get bad enough.
Derivatives? There's a good idea for governance.
Very good idea in a very good thread.
Thanks to every poster.
(revisiting thread)Education & defunding. Can we/any candidate/Congress say/do the funding of NPR has stopped? (They can continue the propaganda.) We, the people are NOT funding it. Just this one thing miniscule thing to get the ball rolling...and then to Planned Parenthood, and then to..., and then to, and, etc., etc.
Yes, you have Carry_Okie. Thanks for your post(s).
It's up to Congress to defund NPR. Although one might be hard pressed to find Constitutional authority to have funded it in the first place, I seriously doubt the SCOTUS would take such a case.
Oh, and you are quite welcome.