Editing Jefferson County, Alabama (section)

===Sewer construction and bond swap controversy===
In the 1990s, the county authorized and financed a massive overhaul of the county-owned sewer system, beginning in 1996. Sewerage and water rates had increased more than 300% in the 15 years before 2011, causing severe problems for the poor in Birmingham and the county.

Costs for the project increased due to problems in the financial area. In addition, county officials, encouraged by bribes by financial services companies, made a series of risky bond-swap agreements. Two extremely controversial undertakings by county officials in the 2000s <!-- What does this refer to? Why not tell what they were?-->resulted in the county having debt of $4 billion. The county eventually declared bankruptcy in 2011. It was the largest municipal bankruptcy in United States history at that time. Both the sewer project and its financing were scrutinized by federal prosecutors. By 2011, "six of Jefferson County's former commissioners had been found guilty of corruption for accepting the bribes, along with 15 other officials."<ref>[http://blog.al.com/spotnews/2010/07/hold_former_jefferson_county_c.html "Former Jefferson County Commissioner Gary White sentenced to 10 years in prison"] {{Webarchive|url=https://web.archive.org/web/20110824012848/http://blog.al.com/spotnews/2010/07/hold_former_jefferson_county_c.html |date=August 24, 2011 }}, Al.com. Retrieved on August 12, 2011.</ref><ref name="BBC Scandal" />

The controversial interest rate swaps, initiated in 2002 and 2003 by former Commission President [[Larry Langford]] (removed in 2011 as the mayor of Birmingham after his conviction at trial<ref>[http://www.al.com/news/larry-langford/index.ssf/index_3.html Larry Langford Impact – Page 3 – - Larry Langford trial{{!}} Latest Larry Langford News] {{webarchive |url=https://web.archive.org/web/20091022114123/http://www.al.com/news/larry-langford/index.ssf/index_3.html |date=October 22, 2009 }}. al.com. Retrieved on March 2, 2011.</ref>), were intended to lower interest payments. But they had the opposite effect, increasing the county's indebtedness to the point that it had to declare bankruptcy. The bond swaps were the focus of an investigation by the [[United States Securities and Exchange Commission]].<ref>{{Cite news |last=Wright |first=Barnett |date=December 18, 2007 |title=SEC wants to force Larry Langford, Bill Blount to testify in Jefferson County bond swap deals |newspaper=Birmingham News |url=http://blog.al.com/spotnews/2007/12/sec_wants_to_force_larry_langf.html |access-date=December 13, 2017 |archive-date=December 14, 2017 |archive-url=https://web.archive.org/web/20171214071433/http://blog.al.com/spotnews/2007/12/sec_wants_to_force_larry_langf.html |url-status=live }}</ref>

In late February 2008 [[Standard & Poor's]] lowered the rating of Jefferson County bonds to "junk" status. The likelihood of the county filing for [[Chapter 9, Title 11, United States Code|Chapter 9]] bankruptcy protection was debated in the press.<ref>{{cite news |last=Hubbard |first=Russell |date=March 2, 2008 |title=Jefferson County finance options likely to be expensive |newspaper=Birmingham News}}</ref> In early March 2008, [[Moody's]] followed suit and indicated that it would also review the county's ability to meet other bond obligations.<ref>{{cite news |author=Hubbard, Russell |date=March 4, 2008 |url=http://blog.al.com/spotnews/2008/03/update_jefferson_county_financ.html |title=Update: Jefferson County finances take another hit |newspaper=Birmingham News |access-date=March 4, 2008 |archive-date=November 17, 2012 |archive-url=https://web.archive.org/web/20121117013914/http://blog.al.com/spotnews/2008/03/update_jefferson_county_financ.html |url-status=live }}</ref> On March 7, 2008, Jefferson County failed to post $184 million collateral as required under its sewer bond agreements, thereby moving into technical default.<ref>Wright, Barnett (March 8, 2008) "[http://www.al.com/news/birminghamnews/index.ssf?/base/news/12049677384610.xml&coll=2 Jefferson County, Alabama sewer debt swap agreement deadline passes"] {{webarchive |url=https://web.archive.org/web/20080309173330/http://www.al.com/news/birminghamnews/index.ssf?%2Fbase%2Fnews%2F12049677384610.xml&coll=2 |date=March 9, 2008 }}, ''Birmingham News''</ref>

In February 2011, Lesley Curwen of the [[BBC World Service]] interviewed David Carrington, the newly appointed president of the County Commission, about the risk of defaulting on bonds issued to finance "what could be the most expensive sewage system in history."<ref name="BBC Scandal"/> Carrington said there was "no doubt that people from Wall Street offered bribes" and "have to take a huge responsibility for what happened."<ref name="BBC Scandal" /> Wall Street investment banks, including [[J.P. Morgan & Co.|JP Morgan]] and others, arranged complex financial deals using [[swap (finance)|swaps]]. The fees and penalty charges increased the cost so the county in 2011 had $3.2 billion outstanding. Carrington said one of the problems was that elected officials had welcomed scheduling with very low early payments so long as peak payments occurred after they left office.

In 2011 the [[U.S. Securities and Exchange Commission|SEC]] awarded the county $75 million in compensation in relation to a judgment of "unlawful payments" against JP Morgan; in addition the company was penalized by having to forfeit $647 million of future fees.<ref>{{cite web |url=https://www.bbc.co.uk/iplayer/console/p00dy3z5/Business_Daily_Alabamas_sewer_debts |publisher=BBC World Service |title=Business Daily: Alabama's sewer debt |date=February 28, 2011 |access-date=March 2, 2011 |archive-date=March 3, 2011 |archive-url=https://web.archive.org/web/20110303090116/http://www.bbc.co.uk/iplayer/console/p00dy3z5/Business_Daily_Alabamas_sewer_debts |url-status=dead}}</ref>