Blacklisted! Jeffco taints whole statePosted by John Archibald March 27, 2008 1:01 AMMarch 27, 2008Think you're safe there, insulated from Jefferson County's financial stinkfest because you live in the suburbs -- or in some far-flung corner of Alabama? Then smell this. Jefferson County's exorbitant borrowing, its unsavory deals and its stench of corruption will have repercussions far beyond the county. It has begun. Financial Security Assurance, probably the biggest still-healthy insurer of municipal bonds since the mortgage crisis knocked the top insurers off their muni throne, has blacklisted the entire state of Alabama. All because of Jefferson County. "We have put a temporary hold on issuing any insurance in Alabama, pending the outcome of what happens in Jefferson County," FSA spokeswoman Betsy Castinir said this week. She would comment no further. What does it mean? That the cloud over Jefferson County is long. And its shadow is ... oily. It's becoming all too obvious, now. This is NOT just Jefferson County's problem. Brokers across the state fear it could mean the worst, that Jefferson County's failure will effectively and unjustly deny other bond issuers -- governments or authorities that want to build schools, roads or public buildings -- access to money or to the highest-rated insurers. That means they will likely pay more in interest to borrow the money they need -- even if they have been responsible. And guess what. When you your government pays more and longer for its debt, so do you. In taxes or sewer rates or whatever the case may be.FSA, a subsidiary of the Belgian bank Dexia, has been active in Alabama, insuring everything from $1.3 billion worth of 2003 Jefferson County sewer bonds to major issues in local and state government. Other insurance companies could join FSA's Alabama blacklisting, or jack up the cost of premiums for insurance. Municipalities rely on bond insurers to help raise their credit ratings, which ultimately allows them to borrow at better rates. Or that's the way it has worked. The longtime kings of the field, Ambac and MBIA, took a bath after they insured securities backed by subprime mortgage money. Credit rating agencies downgraded their AAA ratings. That hurt, because a municipality's bond rating is linked to that of its insurer. Governments and other issuers are now avoiding those downgraded insurers like insurers are avoiding Jefferson County. All that chaos left FSA and the smaller Assured Guaranty Ltd. atop the field. But with FSA out of Alabama, brokers worry that Assured Guaranty won't be able to handle the business -- especially when big-dollar issues come along. They blame Jefferson County. Think about it. It's though your neighbor's teenage son wrecked his Mustang about 17 times, maybe running out of gas as he crashed through a stained glass window at the Baptist church. It's as though your insurance carrier decided it has had enough. So it cancelled the policies on your whole street. So you've got to pay higher rates, or find a new agent. All because of that darned kid. It's that punk Jefferson County, again. He's going to cost us all. Hey. It's just the beginning.John Archibald's column appears Sundays, Tuesdays and Thursdays. Write him at jarchibald@bhamnews.com.
This makes me want to get the fuck out of Alabama. Do you know how much it costs to buy a damn house in the Birmingham area? Tiny Homewood houses run from $250,000. You can get a house twice as nice in Nashville for the same price.
Come on down to West Palm Beach...the median home price is $450,000. You do realize that, that article had nothing to do with the cost of homes though right. I am actually surprised that a columnist would write an article like that as if Jefferson County was the only municipality that got sucked into the subprime mess. Every bank in the known world right now has had writedowns do to the same subprime crisis.
Jefferson County was the only municipality anyone is aware of that jumped in with both feet and brought their own KY jelly to get deeep inside that shit hole. $4.68 Billion in debt. You'd better believe it will affect every mortgage in the State of Alabama within the next 5-10 years.
Actually it won't...it will affect your taxes and assesment rates. How do you figure it will affect your mortgage?
I probably stated that wrong...not current mortgages. It will afftect the hell out of the interest rates, taxes and mortgage insurance going forward.
10 Replies
3591 Views