From The New Mexico Independent, Putting the pieces together: CDR in Alabama

Coming right of the heels of the Birmingham Weekly story which pointed out how Jefferson counties problems are related to New Mexico through CDR Financial products, I find it quite interesting that a reporter all the way across the country is seeing the Muni-Bond Scandal as national in scope.

From the NMI

Putting the pieces together: CDR in Alabama

By Gwyneth Doland 3/6/09 8:04 AM

CDR, the firm at the heart of New Mexico’s GRIPgate pay-to-play scandal, is also at the center of a nationwide investigation into whether the firm, along with banks, overcharged local governments for its services.

But the details have been emerging in pieces, and sometimes the bigger picture is hard to see. A recent column in the Birmingham Weekly adds a little perspective. As columnist Kyle Whitmire writes, “Following federal investigations is much like tracking submarines. You see a periscope break the surface here, pop up there, peek again somewhere else. Then one morning the whole world explodes.”

As a result of bad investments involving CDR, Jefferson County, Ala., is on the verge of the largest municipal bankruptcy in history. It’s a big, ugly mess. Whitmire tries to put together some of the pieces of the puzzle in his home state of Alabama by looking at the related situation in New Mexico. After noting Gov. Bill Richardson’s troubles with the federal investigation, Whitmire asks:

How is this germane to Jefferson County? CDR was the county’s advisor on many of the interest rate swaps-gone-bad. The firm issued fairness opinions passing off on the deals, even though the fees Jefferson County paid were often out of proportion with swaps happening elsewhere in the country.

In addition to looking into whether CDRs contributions to Richardson influenced whether that firm got work with the New Mexico Finance Authority, federal investigators are looking at a 2002 sale of $96.7 million of bonds issued by the University of New Mexico regents. As Whitmore notes, “New Mexico is only a portion of something larger.”

For more on the situation in Alabama, read Whitmore’s column here.

For the full Pay For Play CDR and the Democrats including what Black Box deals are click here.