Jefferson County Turns to SEC for Help

The Jefferson County Muni-Bond disaster is leading to one of the greatest muni bankruptcies in history, in addition the corruption scandals around Mayor Langford have been horrendous in nature. Now the county is trying to get out of a deal that has brought little but pain to the region.

June 4 (Bloomberg) -- Jefferson County, Alabama, asked the U.S. Securities and Exchange Commission to help it escape bond deals that have left the county struggling to avoid bankruptcy for more than a year.

The appeal follows the disclosure by JPMorgan Chase & Co. that it may be sued by the SEC for its work on bond and interest-rate swap sales for Jefferson County’s sewer system in 2002 and 2003. The financings converted $3 billion of the debt to floating-rate bonds, a bid to drive down its borrowing costs that backfired because of the financial crisis on Wall Street.

Jefferson County, home to Birmingham, has been unable to win backing from creditors or state lawmakers for plans to restructure the debts. In a letter to SEC Chairman Mary Schapiro yesterday, County Commission President Bettye Fine Collins asked that creditors be pressed to accept a deal if they committed wrongdoing.“In light of the enormous harm and damage to Jefferson County and its citizens from any violation of the securities laws determined by the SEC, a simple monetary settlement is not likely to fix the underlying problem,” Collins wrote.

The hope is that the county will be able to re-negotiate the deals to come uo with a sustainable solution and avoid bankruptcy, the outline of the deals are as follows:

For more than a year, Jefferson County has struck deals with the creditors to allow it to avoid making full payments on the bonds and related interest-rate swaps. In September, bond insurers Financial Guaranty Insurance Co. and Syncora Guarantee Inc. sued Jefferson County, seeking to strip the county of its control of the sewer system.

Jefferson County, which used the floating-rate debts in a bid to hold down sewer rates, previously appealed for help from the federal government that would allow it to refinance the bonds. Its latest plan for refinancing would also need support from state lawmakers. According to Collins’ letter, the plan asks creditors to accept new bonds yielding 3.5 percent that would be paid off with some of the county’s sales tax money over 40 years.

Creditor Concessions: At one point in the negotiations, creditors led by JPMorgan agreed to give up $1.3 billion, over half of which would come by ending the interest-rate swaps without penalty to the county, according to Collins’ letter. JPMorgan also agreed to contribute another $300 million in cash, she said.

Considering Chase may be sued over these deals, there is little surpise they would settle. As for the Mayor, well his day in court does not start till august. As for the Mayor, he is the one

who :

• Is facing 101 counts on corruption and bribery charges
• The man who bankrupted Jefferson County Alabama
• Helped increase fees on middle and working class people
• The man who did it for designer suits and rolex watches.
• Mayor Langford's Culture of Corruption.
• Who helped J.P Morgan Chase and other Financial Groups overcharge by 100 million in fees Jefferson County.
• The same Mayor who has saddled his constituents with a billion dollar debt.