Thread: Jefferson County to file $4.1 BILLION bankruptcy

First, if you read the article there are already two former county politicians in prison, and likely more to follow, for fraud. Second, I do understand what predatory lending is. I also understand that if I know I currently spend $X/month on my current house/apartment, and someone tells me I can afford $2X, not even including taxes, insurance, and upkeep, yet I am barely getting by with my current payment of $X, then I should probably be wise enough to tell them they are wrong. Third, I have never said the banks are without fault. I will however argue that they are merely 1/3 of the equation, and all three parties share equally in the blame, but the response I usually get is that the banks are at fault, and the other two parties were dupes, but I disagree strongly.

Yes, I know it is an anecdote, but I had multiple friends that were mortgage brokers/bankers during the housing boom, and they ALL had similar stories where people would come in, say they wanted a loan for $Y, and the lender would look at their financials and say while they could be approved for it they really couldn't afford it. So, what does this consumer, who is supposed to take the advice of the wiser financial consultant, do? They go down the street to the next lender, who has lower morals, and gets the loan for $Y, and likely ends up in foreclosure shortly after. All that being said in MANY, not all, cases the borrower is just as guilty as the lender.

And our good old friends Fannie and Freddy. You can call them whatever you want, but the federal government tells them what to do, and they were told to get people in houses. They were told that if a borrower had a 580 or better credit score nothing else really mattered, and that if they had a score that shiny they would likely tell the truth about how much they make, and how much they can afford, so we don't need to check on them. So they told lenders to give out the money as long as the numbers were right, so the banks did. But I'm sure it's in no way their fault, it was all just the banks, right?

As for Jefferson County, I know nothing about it other than the article I read. It states that the sewers HAD to be upgraded to meet federal regulations. I am sure they looked at the current tax income, expected it to at minimum stay the same, and did what they had to do to get the money. Then tax/rate increases they planned were stricken because they weren't legal, and I am sure like most counties their tax revenue is half or less of what it was 5-10 years ago, and all that is a recipe for failure. Could it have been avoided? I don't know how if the improvement was mandatory, so someone had to pay for it.

As for other municipalities I agree. When I as in Phoenix I read articles about the city/state having to sell all of their office buildings and such, then lease them back, so they could afford to pay their bills. I read another article about a city in MI that had to turn off, and tear out, the vast majority of the street lights in the town because they could no longer afford the electric bill.

We can argue for years, literally, about who's fault it is/was, but if we don't get some real answers fast we are all going to be paying for it. Since I don't really trust the banks, or the politicians, my present plan is to invest heavily in lead.

Originally Posted by CivilWars

As for Jefferson County, I know nothing about it other than the article I read. It states that the sewers HAD to be upgraded to meet federal regulations. I am sure they looked at the current tax income, expected it to at minimum stay the same, and did what they had to do to get the money. Then tax/rate increases they planned were stricken because they weren't legal, and I am sure like most counties their tax revenue is half or less of what it was 5-10 years ago, and all that is a recipe for failure. Could it have been avoided? I don't know how if the improvement was mandatory, so someone had to pay for it.

I only know what I've read from this post.. but if the set up was in fact: Federal regulation forces state or lower to pay to comply with the regulation but the Federal government is not funding the compliance, then the regulation is not enforceable.

http://assets.opencrs.com/rpts/R40957_20110419.pdf