Jefferson County's "dirty little secret" hit the national news today. The WSJ featured the article on their front page summary this morning. Jefferson county has told the banks that want an additional $200 million to back a derivative trade that they won't be paying. This story is a poster boy for the trouble other municipalities may face in the upcoming months. The difference being that Jeff Co acted like they were on a 4 day binge in Vegas, gambling tax payers money. The municipal bond markets have suffered due to the subprime fallout, but the leaders of Jefferson County went over and beyond what most cities were willing to risk.

This blog link tracks the story back to its beggining: WSJ Econ Blog

Here is the WSJ link (paid site)

I would like to know who advised the city to be this reckless and more importantly, where are the kickbacks to the commissioners for playing along. This will be a scandal that will have far reaching effects before it is over, and I feel without a doubt will result in criminal convictions along the way.

The black eye for Birmingham as well as the probable bankruptcy for Jefferson County, will have a negative effect on the housing market. If basic services such as sewer, law enforcement, or trash service suffer in any way, the housing market in Jefferson county will suffer along with it. Even if the county can manage to keep it together, the publicity could keep people relocating to the area from buying in Jeff Co.

For what it is worth, I am glad to see the WSJ pick up this story. Hopefully, it will force the local media to hound the story more and uncover any criminal activity that may have occured.