Jefferson County is Alabama's most populous county, the home of Birmingham, and now destined to be the answer to a dubious trivia question: County commissioners today voted to file the biggest municipal bankruptcy in US history, reports the Birmingham News. The $4.1 billion bankruptcy stems from $3.14 billion in debt to creditors—mostly Wall Street banks, led by JPMorgan Chase—over repairs to the sewer system.
Interest rates on county bonds have spiraled out of control in the Great Recession, and the county can no longer make payments. The bankruptcy threat has loomed for three years, and it could ripple in the national muni bond market, notes Bloomberg. “It’s going to create attention-grabbing headlines, and the question is how retail investors react,” says one in the industry. The move comes a month after Harrisburg, Pa., found itself in similar straits. (Read more Jefferson County stories.)