Need new wheels? Check out Autoblog's new car reviews.

AOL Money & Finance

Alabama county mulls bankruptcy; could be largest failure in history

With irresponsible borrowing and excessive leverage threatening the financial well-being of so many families, at least one county may be joining them in the soup line.

Jefferson County, Alabama, with a population of 662,047, according to the 2000 U.S. Census, is preparing for a possible bankruptcy filing, according to The New York Times.

Birmingham, Alabama skyline

The culprit? $3 billion in bonds with rapidly escalating interest rates resulting from the exact same short-sighted financial planning that got so many home owners into trouble: adjustable rate loans (In this case, auction rate securities) that require higher interest payments as interest rates move up. The current turmoil in the credit market has sent the county's rates as high as 10%.



Town officials told the Times that a bankruptcy filing is not a sure thing and that efforts to negotiate with the creditors, Citigroup (NYSE: C) and JPMorgan (NYSE: JPM) have "some likelihood to work." If it doesn't, this will be the largest municipal bond default in U.S. history, and will etch Jefferson County's name in the annals of infamy alongside Orange County and the Washington Public Power Supply System.

Related Posts

Reader Comments (Page 1 of 8)

Symbol Lookup
IndexesChangePrice

Last updated: December 04, 2008: 01:32 AM

BloggingStocks Exclusives

Hot Stocks

BloggingStocks Featured Video

TheFlyOnTheWall.com Headlines

WalletPop Headlines

AOL Business News

Latest from BloggingBuyouts

Sponsored Links

My Portfolios

Track your stocks here!

Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

BloggingStocks Partners

More from AOL Money & Finance