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Follow The Jefferson County Chapter 9 Negotiations Live

Tyler Durden's picture


Earlier, we noted a release that the probability of what can soon be the largest US municipal bankruptcy in history, that of Jefferson County, Alabama, is 80%. On this painfully slow day (and in the aftermath of four 400+ DJIA point swings anything would be a snooze), those who wish to follow the hearing in real time can do so here courtesy of Birmingham News. While we have described the nuances in the past, the bottom line revolves around whether the proposed debtor plan which sees a 66 cents on the dollar recovery to the creditor committee led by JPM. If indeed there is only 20% chance of default avoidance, this will likely be the catalyst event that unleashes many other comparable muni Chapter 9 filings, which would now have a case study that not only it can be done, but how it should be done.

More about the latest news in the situation in the Birmingham News

h/t Cate Long


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Fri, 08/12/2011 - 13:13 | 1554659 Cognitive Dissonance
Cognitive Dissonance's picture

This one's for the Meredith.

Fri, 08/12/2011 - 15:55 | 1555337 I am a Man I am...
I am a Man I am Forty's picture

this things been going on long before mw knew what a muni bond was

Fri, 08/12/2011 - 13:13 | 1554663 T-roll
T-roll's picture

This will be a "sell the news" event either way.

Fri, 08/12/2011 - 14:01 | 1554874 Stoploss
Stoploss's picture

I agree.  Asia is on holiday Monday, we get the sell jump this time. RUT is struggling, and there sure is a lot of short side volume today to be so quiet. Shhh. 

Fri, 08/12/2011 - 13:16 | 1554670 TruthInSunshine
TruthInSunshine's picture

Jefferson County Sez: 

We iz git no luv from The Bernank. Bernank luvs Goldman & JP Morgan aint luving on us.

The Bernank Sez:        

Yo, why u doggin' me, bitch? I ain't gonna go splain to da Senate that I bailed yo azz out, aight? And California, don't EVEN ring me, aight? You aint got no red seal, either, aight...

Fri, 08/12/2011 - 13:19 | 1554689 KennyG09
KennyG09's picture

You just made work much more bearable. Lolz

Fri, 08/12/2011 - 13:29 | 1554736 Pchelar
Pchelar's picture

Yo dog, give dat bitch one-a dem bailouts.  Bitchez luv bailouts 'n shit.

Fri, 08/12/2011 - 13:16 | 1554671 High Plains Drifter
High Plains Drifter's picture

its dem wascally white boys that are doing this to us. let's burn and pillage and take what is ours as a downpayment on dem reparations we is owed.

Fri, 08/12/2011 - 13:20 | 1554672 High Plains Drifter
High Plains Drifter's picture


Fri, 08/12/2011 - 13:16 | 1554673 caerus
caerus's picture

the chair recognizes the other chairs...


Fri, 08/12/2011 - 13:16 | 1554674 unununium
unununium's picture

> ... painfully slow day

Thank you weekly opex for the regular dose of valium.

Fri, 08/12/2011 - 13:26 | 1554704 caerus
caerus's picture

watching today's market is like watching paint dry...hope the action picks up into the close


edit: a stillness like death (thanks kierkegaard)

Fri, 08/12/2011 - 14:33 | 1555010 slaughterer
slaughterer's picture

2:30 pm.  The 'bots are back in town!

Fri, 08/12/2011 - 19:23 | 1555914 Galen Slade
Galen Slade's picture

It was pretty bad today - Tyler was Twittering stuff like, oh look, someone bought a T-bill.  ZZZ.  Oh look, someone bought two ES contracts.  ZZZ...

Fri, 08/12/2011 - 13:22 | 1554699 souljaboy
souljaboy's picture

Is Wesley Mouch chairing the meeting?

Fri, 08/12/2011 - 13:23 | 1554705 souljaboy
souljaboy's picture

10-1 they're all overweight.

Fri, 08/12/2011 - 13:26 | 1554723 bugs_
bugs_'s picture

Sewer Creditors

Fri, 08/12/2011 - 13:31 | 1554743 Seasmoke
Seasmoke's picture

.66 cents on the dollar is still .33 cents too much !

Fri, 08/12/2011 - 13:40 | 1554793 Bob
Bob's picture

I agree that we'll see a strong trend.  And that this will provide something of a real template. 

Now why, that being the case, do I think hundreds of muni's will nonetheless pay outrageous fees in every case for what is, if not now, then fairly soon, boilerplate work?

We should keep an eye on that, me thinks. 

Fri, 08/12/2011 - 13:58 | 1554821 papaswamp
papaswamp's picture

errrr...nobody is there....hello?  Ohh the brunette stenographer is hot!

Fri, 08/12/2011 - 13:48 | 1554826 Josh Randall
Josh Randall's picture

ALABAMA will lead the charge - time to stop tearing "Vote for Wallace" bumper stickers off of cars!

Fri, 08/12/2011 - 13:48 | 1554828 PulauHantu29
PulauHantu29's picture

"Once you've had steak and fine wine, it's hard to return to ham and eggs."


That's what my Father says. He is UberFrugal and prepared for what he predicted would be an eventual "correction" ...although the pessimists call it a "deep recession." My boss cut salaries 10% (and later another 10%) and cut moderately back on benefits but we all agreed it was better then shuting down and firing everyone. This is how the private sector works. Unfortunately, there are several unions that don't want to yield so Chapt 9 is forced on them is the "Great Persuader."

He also warned me again and again, "free money distorts the market and creates an Uber Bubble" referring to Zero down NINJA mortgages.

GL! to everyone. I am heading off to eat my ham and egg sandwich.

Fri, 08/12/2011 - 14:08 | 1554909 navy62802
navy62802's picture

Oh come on ... don't be such a buzz kill! WE'RE IN THE MIDDLE OF A RECOVERY.

Fri, 08/12/2011 - 13:49 | 1554833 virgilcaine
virgilcaine's picture

From the somber atmosphere, looks like a done deal.

Fri, 08/12/2011 - 13:53 | 1554843 kito
kito's picture

this is america!!! they will be bailed out!!!! ZERO pct chance of bankruptcy!!!

Fri, 08/12/2011 - 14:19 | 1554944 papaswamp
papaswamp's picture

Ok so they are off doing a backroom deal away from the cameras...typical govt.. Taxpayer to be screwed...again and again....

Fri, 08/12/2011 - 14:19 | 1554948 jmac2013
jmac2013's picture

Everyone has seen the interview by Max Keiser with Matt Taibbi on Jefferson County's mess?  He lays out a compelling case of fraud and bribery against Jefferson County by JPM and the corrupt political figures there.  I know shocking, right.

Fri, 08/12/2011 - 14:23 | 1554957 virgilcaine
virgilcaine's picture

sit there you drones and stand and salute when the other drones walk in. lol

Fri, 08/12/2011 - 14:23 | 1554963 slackrabbit
slackrabbit's picture

For the love of god, and this one please be the bankruptsy that brings the house down.

The whole sorded mess just keeps on going?

Frankly at least if there were riots in the streets the right people would be hanging

Fri, 08/12/2011 - 14:29 | 1554989 No One
No One's picture

its 1:30 CT.. has someone filed Ch. 9 yet?

Fri, 08/12/2011 - 14:30 | 1554992 Fix It Again Timmy
Fix It Again Timmy's picture

Looks like Wall St. has gotten a room full of high-class hookers for the good-ole boys - all that I see is empty seats...

Fri, 08/12/2011 - 14:44 | 1555047 papaswamp
papaswamp's picture

they are behind closed doors....bribing the officials and will come out with a grand deal that in the end will screw the people....banksters and politicians will make bank. Watch...magic deal before the day is done....corrupt as anything. Or humanity will shock me and do the right thing, default and kill all the bad deals in place, save the taxpayer. I hope for the shock, but expect the corrupt deal.

Fri, 08/12/2011 - 15:50 | 1555318 papaswamp
papaswamp's picture

I hate it when I'm right....

Fri, 08/12/2011 - 16:48 | 1555543 ex VRWC
ex VRWC's picture

You were right.  Accept the deal but act like they don't want to.

Fri, 08/12/2011 - 14:47 | 1555069 smlbizman
smlbizman's picture

do you think someone told them we were watching?

Fri, 08/12/2011 - 14:48 | 1555070 virgilcaine
virgilcaine's picture

where everyone go?

Fri, 08/12/2011 - 15:09 | 1555170 Raymond K Hassel
Raymond K Hassel's picture

Someone realized it was too ironic to have 4 county employees chatting around on the clock for hours on end waiting for a hearing about filing BK to start.  They are now in a back room, still chatting, still on the clock. 

Fri, 08/12/2011 - 15:11 | 1555186 navy62802
navy62802's picture

They're waiting for the markets to close for the day.

Fri, 08/12/2011 - 15:35 | 1555260 papaswamp
papaswamp's picture


Fri, 08/12/2011 - 15:09 | 1555169 T-roll
T-roll's picture

They will announce their decision promptly at 4:01 EST.

Fri, 08/12/2011 - 15:11 | 1555177 Raymond K Hassel
Raymond K Hassel's picture

Can we read the tea leaf of a 4:01 announcement and guess what the decision is?

Fri, 08/12/2011 - 15:12 | 1555181 Fix It Again Timmy
Fix It Again Timmy's picture

Nice chairs, etc.  All gov't buildings should be quonset huts with folding chairs and folding tables simply because you know who is paying for them.  I could sure put that money to better use, no need to get Imperial Roman...

Fri, 08/12/2011 - 15:27 | 1555243 SokPOTUS
SokPOTUS's picture

For sure FIAT.  Surely those tables and chairs could be sold off to meet the demands of creditors to keep the Ponzi going over the weekend.

Fri, 08/12/2011 - 15:42 | 1555281 Incubus
Incubus's picture

Well we're movin on up, to the east side. To a dee-lux apartment in the skkyyyy


actually,  I think this is the better song:


They should remake it, only with the Bernanke and Geithner as the leads. 

Fri, 08/12/2011 - 15:44 | 1555294 Fix It Again Timmy
Fix It Again Timmy's picture

STFU and just say "Chapter 9, baby - suck it up".

Fri, 08/12/2011 - 15:48 | 1555304 No One
No One's picture

searching twitter for #jeffco.. and the "deal" is 2.3B remaining in debt at 7.8%.. The old rate was 6.1%.. Don't know the old principal.


HAHAHAHA... Is this a good deal??? WTF??? Just file 9, and get it over with.

Fri, 08/12/2011 - 15:47 | 1555309 Raymond K Hassel
Raymond K Hassel's picture

I'm about to get a boner - it's sounding like the council is going to give JPM the unanimous finger. 

Fri, 08/12/2011 - 15:50 | 1555319 Incubus
Incubus's picture


Fri, 08/12/2011 - 15:50 | 1555322 No One
No One's picture

What's awesome is that all this is over a sewer.. ironic.

Fri, 08/12/2011 - 15:58 | 1555347 ThirdCoastSurfer
ThirdCoastSurfer's picture

The meeting is on.  It doesn't look good.

$2.9b is the total amount to be borrowed. A 7.8% increase is immediate followed by a 7.8 increase in 6 months and a 7.8% increase 12 months later. 25% in 18 months. These increases are estimates contingent to the State agreements to their conditions. 

The debate is focusing on all the unknowns, or contingencies, of which there are many. 

For example, the proposal will require the State to legislate:

A reduced interest rate for repayment based on the State paying the difference. 

Auth to fund a 1/4 billion dollar reserve should JeffCo fall behind

Auth to cover any losses that exceed the reserve should the reserve fail.


Fri, 08/12/2011 - 16:22 | 1555433 papaswamp
papaswamp's picture

36% of the state is on food stamps and they are going to force this deal on all the taxpayers of the state? Incredible....are the people of Alabama even paying attention? Do they realize how bad they are being screwed? America is toast if this is any indication.

Fri, 08/12/2011 - 16:59 | 1555595 navy62802
navy62802's picture

I doubt that even the entire state of Alabama will be able to absorb over $3 Billion in debt. I think it's going to be a mistake to get the state to basically sign onto the deal because this may be the debt debacle that broke the camel's back. Then the state itself would be facing certain Chapter 9 vice only Jefferson County.

Fri, 08/12/2011 - 16:04 | 1555372 Raymond K Hassel
Raymond K Hassel's picture

What is amazing is that so far ALL of the council members have a solid handle on this shakedown of a deal.  They may give local gov't a good name (ignoring for the moment that they got themselves into this mess to begin with)

Fri, 08/12/2011 - 16:05 | 1555377 virgilcaine
virgilcaine's picture

default bitchez!

Fri, 08/12/2011 - 16:13 | 1555403 Seasmoke
Seasmoke's picture

i find it hard to believe Sandra Little Brown is going to vote for this

Fri, 08/12/2011 - 16:25 | 1555454 navy62802
navy62802's picture

WSJ is reporting that "Alabama County Expected to Avoid Bankruptcy."

Guess we'll find out here shortly whether their reporting is accurate or pure BS to calm people until the actual decision comes out.

Fri, 08/12/2011 - 16:33 | 1555476 Raymond K Hassel
Raymond K Hassel's picture

Fuck the WSJ - Proposal Rejected - Unanimous.

Fri, 08/12/2011 - 17:21 | 1555467 citta vritti
citta vritti's picture

listening to these guys and girls just seems to confirm they don’t really know, or maybe don’t really care what kind of obligations they got into, are trying to get out of, or are going to get into going forward. The mismatch of fee-hungry investment bankers and local talent is striking. What they can see is enormous pressure being brought to bear by the governor and others behind the scenes not to default, the pressure being measured by reduction almost 1/3 of the nearly $3 billion their original good ol’ boy dealmaking got them into, and that seems to be good enough. The ratepayers will pay, and if not them, then the rest of Alabama. God help us. 

Meanwhile, some of Lynyrd Skynyrd must be rolling over: 

Edit: In light of new info below ("Proposal just rejected”), if true, my bad. Good for them.

Re-edit: So they’ve decided again not to decide, albeit not accepting the supposedly final, final creditor proposal, but to take over the dealmaking w/ JPM et al. themselves, and coordinate with the Governor and legislature for another month-plus to wring out another 120-140 million and block 2 or 3 rate increases cumulating 18-25% in a year and 3% annually after that. I don’t know what the status of the currently scheduled payments is, but it’s beginning to sound like they’re well into flushing for free, although judging from reader comments at Birmingham News site, it also sounds like a lot of what was supposed to be built wasn’t, or wasn’t built well, so folks might want to be careful.

Fri, 08/12/2011 - 18:39 | 1555838 navy62802
navy62802's picture

I got the distinct sense listening to the council deliberate that there is some extremely shady shit going on at the state level. And their distrust of the governer's office came through in their remarks.

Fri, 08/12/2011 - 17:03 | 1555475 ThirdCoastSurfer
ThirdCoastSurfer's picture

She has a point, they really are talking about taking the State down with them. Since the State will functionally be required to become a co-signer to the debt, the State is being asked to assume the $2.9b debt. So why not give the State a chance to vote down any one of the State's new requirements and extend this out to Sept 16th for the State legislators to vote?  If any one of the 3 requirements fail to pass they can start all over.

They can then write up a new draft that imposes all the same requirements, but with the Federal Gov backing the State on any requirement they refuse to accept so we'll get 3 separate issues to be voted for passage by 4 legislative bodies and two veto powers. It should be 2020 by then and fiat inflation will make the whole matter moot. 

This will continue to drag on until the bondholders call it quits, not the council. 

Fri, 08/12/2011 - 16:31 | 1555479 navy62802
navy62802's picture

BAM! Proposal was just rejected ... now the vote on whether to file bankruptcy or not.

Fri, 08/12/2011 - 16:35 | 1555482 Seasmoke
Seasmoke's picture

Now these are REAL PATRIOTS !

Fri, 08/12/2011 - 16:38 | 1555484 virgilcaine
virgilcaine's picture

what a joke..the Governor.. blah.. negotiate... transparency.. blah.

Fri, 08/12/2011 - 16:38 | 1555499 BORT
BORT's picture

Can I ax ya what this will mean wiff my Social Security?

Fri, 08/12/2011 - 16:40 | 1555509 papaswamp
papaswamp's picture

Delay bitchez!....again.......

Fri, 08/12/2011 - 16:47 | 1555535 ex VRWC
ex VRWC's picture

This is nothing but kabuki theater.  They are trying to act like they don't want to agree to the banks demands but it is preordained.  Now that are all off to vacation.  What a crock.

Fri, 08/12/2011 - 16:54 | 1555565 Hooter Shaker
Hooter Shaker's picture

I think they are trying to use the leverage of bankruptcy to get an even better deal.  It's going to be entertaining to watch the JPM city slickers roll into Alabamastan for a haircut right about scalp level by these unsophisticated country bumpkins!

Fri, 08/12/2011 - 17:31 | 1555673 ex VRWC
ex VRWC's picture

They have set it up so that a small adjustment can be declared a victory.  Someone took them in a back room and scared the bejeezus out of them.  Something like "you don't want to be the largest bankruptcy in history, do you?  You don't want to be the domino that's  responsible for martial law in the streets and grandma having no heating oil, do you?  Your bankruptcy will paralyze your city for years and will stigmatize your city forever.  Your only choice is to keep paying"

They will agree to these terms, or something very close, keep screwing the people with debt repayments to bankers forever, and declare victory.

Fri, 08/12/2011 - 18:11 | 1555772 papaswamp
papaswamp's picture

yep….too bad they don't have the balls (ovaries) to say fuckoff ...

Fri, 08/12/2011 - 17:31 | 1555676 MachoMan
MachoMan's picture

When cheap credit is available, everyone goes full retard...  but, when it comes time to pay, everyone becomes rather sophisticated.  Curious.

Fri, 08/12/2011 - 18:03 | 1555753 topcallingtroll
topcallingtroll's picture

Excellent point

Sat, 08/13/2011 - 00:24 | 1556471 Hulk
Hulk's picture

insight of the year!

Fri, 08/12/2011 - 18:05 | 1555759 cfosnock
cfosnock's picture

They were bluffing, they want to take another 30 days to negotiate. This is a joke.

Fri, 08/12/2011 - 18:39 | 1555829 Dburn
Dburn's picture

I was hearing that the lowest sewer bill was well over $300 . There is no way that a middle-income  home-owner or even a renter could absorb this if it was passed along by the landlord. This may also be a pitchfork and knives moment over paying an additional  10x the average sewer bill based on one of many fuck-you deals by JPM.

Sat, 08/13/2011 - 00:37 | 1556483 Hulk
Hulk's picture

I propose yet another unfunded liability: CAP  Crap Assistance Program

or combine the two

SNAPCRAP- Supplemental nutrition Assistance program and crap removal assistance program

Fri, 08/12/2011 - 18:58 | 1555884 navy62802
navy62802's picture

It was really painful to watch the council deliberate over what to do because they're choosing between being bled dry or declaring bankruptcy. Either way they're screwed ... which is going to be extra difficult for some of the poorest people in the nation.

Fri, 08/12/2011 - 19:44 | 1555945 Buck Johnson
Buck Johnson's picture

Many bankruptcy's will be coming up via the local and state govt..

Fri, 08/12/2011 - 20:08 | 1555990 navy62802
navy62802's picture

The thing about this whole Jefferson County thing is that it is essentially the national problem being played out at the local level. Which is actually quite frightening if you think about it. Because if the problem were only at the national level, that would be one thing. But this reaches all the way down to the municipal level. These people on the Jefferson County council are doing precisely what our national legislators are doing. They're putting off making the tough decision. In the end, they will be forced to declare bankruptcy. The income is simply not there to pay for the debt obligations that the government has signed up for. To steal a phrase from Dylan Ratigan ... it's a mathematical fact. And the sooner they declare bankruptcy, the quicker and less painful it will be. But instead, these people just kick the can down the road as far as possible (a month in this case). First it was a week, then another week, now a month. It's sad because this is exactly what is happening at the national level.

Sat, 08/13/2011 - 06:26 | 1556837 prole
prole's picture

IIRK this was a combination insider deal and totally non-necessary sewer boondoggle forced down their country bumpkin throats by some lofty-goals retard fed agency. Throw in the normal bribe the local fatcats this county got fleeced like a banana republic. Reminds me of E'gypt's natgas deal (what a deal).

2 obvious solutions by my way of thinking-

A- ask for a bill for payment in full then send it to the fed agency that forced this rip-off down their throats, then say it's no longer their concern.
B- stop paying the mortgage on the redundant and unwanted sewer. Let them come reposses the stupid sewer. They don't need it and nobody ever wanted it in the first place. Let the bloodsuckers have it back, why put the whole county in bk for something they don't need/want?

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