Thursday, November 5, 2009

Has Birmingham avoided bankruptcy?

Yesterday afternoon the Securities and Exchange Commission announced that JPMorgan Chase & Co has agreed to pay Birmingham, Al $700 million over the sewer bond deal scandal that's nearly caused Birmingham to file for bankruptcy numerous times over the past eighteen months. Just to give you a hint of what a financial mess Birmingham is in because of these bond deals. The $700 million settlement with the SEC only reduces Birmingham's debt from 3.9 BILLION to 3.2 BILLION. There's more good news for Birmingham and Alabama's taxpayers in this settlement though. The way I understand it is that there's nothing in this settlement agreement preventing local prosecutors from going after JPMorgan. You would have to assume their already doing this behind the scenes in terms of settlement talks given all thats gone on in Birmingham the past few weeks. So at the end of the day I would suspect Birmingham will have their debt reduced even further down than where its at today. If these settlements bring in the type of money I suspect they will then Birmingham will avoid becoming the largest city in the country to ever file for bankruptcy. There are also rumors floating that a settlement is near between the SEC and former Birmingham Mayor and now convicted felon Larry Langford(D). Not much will come from this settlement though in terms of monetary damages. Mr Langford had to use a public defender in his criminal trial last month and he's facing over 800 years in prison after being convicted on all 60 counts last week. The real juicy stuff came at the end of the documents the SEC released yesterday where they allege that two directors at JPMorgan gave close friends of certain former and current Jefferson County, Al. Commissioners eight million dollars. These "close friends" worked at financial firms in the Birmingham area and the SEC alleges these "close friends" performed no known services to receive that kind of payment. One of these commissioners whose "close friends" were suddenly flush with cash is none other than former TV reporter Sheila Smoot who just happens to be one of the frontrunners in the race to replace Congressman Artur Davis in Congress next year. I'm sure Nancy Pelosi can't wait to see her.

http://sec.gov/news/press/2009/2009-232.htm

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