Jefferson County, Alabama, may decide to declare bankruptcy today — in what would be the largest municipal bankruptcy in United States history — as it tries to grapple with the fallout of a financing deal with JP Morgan that has left it financially crippled. JP Morgan conspired with a slew of other banks to charge Jefferson County tens of millions of dollars in unnecessary fees; the mega-bank saddled Jefferson County with a predatory swap deal that has driven the county hundreds of millions of dollars into debt.
But as Bloomberg noted today, this “sleaze” deal hasn’t slowed down JP Morgan’s municipal bond business at all:
Yet while JPMorgan’s deals denuded Jefferson County, the company has emerged with its municipal-debt underwriting business unscathed. During the past two years, public officials from California to Massachusetts hired the New York-based bank to arrange $64.7 billion of bond offerings, making it the third- largest underwriter in the market for state and local securities, according to Bloomberg data.
In fact, as Jefferson County tilts on the brink of bankruptcy, JP Morgan is pulling in record profits. In 2010, the bank made $17.4 billion, and during the previous quarter this year, it “reported the biggest quarterly profit in its history.”
As Rolling Stone’s Matt Taibbi put it when describing JP Morgan’s actions in Jefferson County, “Here you can see a trail that leads directly from a billion-dollar predatory swap deal cooked up at the highest levels of America’s biggest banks, across a vast fruited plain of bribes and felonies — ‘the price of doing business,’ as one JP Morgan banker says on tape — all the way down to [one resident’s] sewer bill and the mass layoffs in Birmingham.” Jefferson County was forced to furlough 1,000 workers last month in a desperate attempt to save money and avoid bankruptcy.