Langford Trial Enters Week 2 as CSM Looks at Muni-Bond Scandal

The CSN, story, which only brushes on the nationwide scope of the muni-bond scandal does provide a good look at Langford's role but doesn't expand to include Richardson or the role of black box deals in how these swaps were out together:

Justice Department investigations

The US Justice Department is investigating half a dozen former Wall Street investment bankers and scouring municipal bond deals from Florida to California, looking for more instances where taxpayers were essentially swindled by secretive gambling on the $2.8 trillion municipal bond market.

In the Langford case, “You basically had local officials setting terms, and the banks didn’t have a problem with that,” says Joe Adams, research coordinator at the Public Affairs Research Council of Alabama.Langford’s alleged scheme involved a new fleet of financial instruments that hundreds of other cities and counties across the US have also utilized.

Those new instruments – which include derivatives and interest-rate swaps – came on the scene as municipal governments started making no-bid agreements with bankers behind closed doors, says Mr. Brooks at the University of Alabama.As the credit crisis undermined many of those deals, public borrowers began paying billions of dollars to escape the contracts.

Alabama’s unique Constitution, which leaves county government basically unregulated, has created a system “that’s structurally designed for corruption,” says Mr. Adams. But the Langford case may indicate that wherever the new bond financing deals involve collusion and corruption, the results can be dire.

Interest-rate swaps

Specifically, the refinancing that Langford structured for Jefferson County involved interest-rate swaps, which JPMorgan Chase bankers said could reduce the county’s interest costs. (In SEC testimony last year, Langford, who attended Harvard’s Kennedy School of Government in 2000, said he couldn’t tell a bond swap adviser from a rubber band.)

Instead, rates skyrocketed after ratings for the county’s bond insurers fell during last year’s credit crisis. Debt payments for the county’s sewer system ballooned to $460 million a year – twice the annual revenues of the system.A former TV news anchor, Langford had emerged as a pragmatic pro-business visionary by the time he became president of the Jefferson County Commission in 2002.

Trusted by both the city’s majority black community and suburban whites, Langford pushed a vision that sleepy Birmingham could become “the best ‘New South’ city in the nation.” (He was easily elected mayor of Birmingham in 2007 and has a lot of political support even today.)As county president in 2003 and 2004, Langford, according to prosecutors, received lavish gifts – including cash, cars, and fancy shoes – from Bill Blount, a former Democratic Party state chairman turned investment banker.

In return, Langford insisted that Wall Street banks do business directly with Mr. Blount, who racked up more than $7 million in fees from the Jefferson County bond deals, according to testimony.The two men would travel to New York and spend more time in the city’s shopping district than on Wall Street, Blount said in testimony this week. Langford would put clothes on the counter and Blount would pay with a credit card.

“Thank you,” Langford always said, according to testimony.The Birmingham Weekly has continuous coverage of the trial, including a Live Blog feature here

Well, at least Langford was courteous as he allegedly accepted bribes. Coming off a week where the prosecutor established a pattern of apparent pay for play that the defense attempted to dismantle as "Business as usual". Friday's testimony which was cappped by some damaging evidence from La Pierre, certainly has dug domething of a hole for Langford's team to get out of:

TUSCALOOSA, AL (WBRC) - Lobbyist Al LaPierre took the stand on Friday in the Larry Langford federal corruption trial, testifying about his role in what prosecutors said was a conspiracy and fraud between Langford, LaPierre and Montgomery businessman Bill Blount.

During his testimony, LaPierre explained how Langford called him in desperation for a $69,000 loan to pay off debts. LaPierre said he then approached Blount for the cash, but Blount told him he could not pay the loan because of federal rules. That is when LaPierre said he became the go-between between Langford and Blount for the money.

Langford attorney Glennon Threatt strongly questioned LaPierre Friday afternoon on his motives and his previous guilty with prosecutors. Threatt asked LaPierre if he and Blount decided to pay off Langford's clothing debt at Remon's to manipulate Langford and Langford's addition to clothing and gambling.

"We did it to protect him," LaPierre responded, but added, "I'm not the guy feeding junk to the junkie."LaPierre and Blount both plead guilty to charges in the case earlier this year in exchange for their cooperation with prosecutors. On the stand Friday, LaPierre admitted he bribed Langford and broke the law.

"When did you decide to break the law?" Threatt asked.

"I guess when I took the note out," LaPierre answered.

"When did Langford decide to break law?" Threatt asked.

"When he took the loan," LaPierre answered.

Threatt pounds table, asking, "Did Langford ask for a cut? Did you offer Langford a percentage of the deals?"

"No," said LaPierre.

"Was there ever an express agreement to break the law?" Threatt asked.

"Not until we signed the notes," LaPierre answered.

After attorneys finished questioning LaPierre Friday afternoon, the judge recessed the court.

Earlier in the day, Blount testified he hoped to get lucrative bond work when he began giving money to Langford.

All this for fancy suits and watches.