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http://www.bbc.co.uk/news/world-us-canada-15668788Leaders of the largest county in the US state of Alabama have voted to file for a $4.1bn (£2.6bn) bankruptcy, the costliest US municipal failure ever.
Jefferson County has been struggling to avoid bankruptcy since 2008, but recent talks on a deal to restructure its crippling debt broke down. The county sunk into debt after a costly upgrade of its sewer system.
Announcing the vote result, Commissioner Jimmie Stephens said filing for bankruptcy would not radically change the situation in the county. "Jefferson County has, in effect, been in bankruptcy for three years," he told the Associated Press.
In September, a deal with the county's creditors, including JPMorgan Chase, saw lenders agree to forgive about $1bn in debt, with the county refinancing another $2bn, and a series of sewer rate increases. However, the negotiations ended some $140m short as terms of the deal shifted, increasing the repayment amount from $2.05bn to $2.19bn.
Jefferson's mounting debt issues were brought on by a combination of increasing interest rates on bonds, turbulency in the derivatives market and corruption among local government officials.
At least 21 people, including four former county commissioners, have been convicted or pleaded guilty to corruption-related charges in connection with the sewer's construction and bond financing, according to Bloomberg News.
In 2008, the GOP's Tea Party branch took control in Jefferson County, Alabama, and ushered in a host of Tea-Party type changes - including the loss of about 40% of tax revenue. Is this a fluke or will it happen elsewhere (like in VA which just saw a similar take-over in its state congress)?