(snip)Alabama group files suit over Jefferson County debt
BIRMINGHAM, Alabama (Reuters) - An Alabama activist group has filed a lawsuit seeking to cancel $6.6 billion in debt and related swaps issued by Jefferson County, claiming the county faces financial disaster because of misdeeds by Wall Street firms, corrupt local politicians and others.
The lawsuit, filed in Jefferson County Circuit Court under a state law that allows citizens to sue parties corrupting government, names as defendants several Wall Street banks and leading local politicians, including Birmingham Mayor Larry Langford.
Birmingham, Alabama's largest city, is located in Jefferson County.
"We intend to hold Wall Street accountable for its role in the county's auction-rate bond and swaps debacle," said James O'Neal, the lawyer who filed the suit. "The county has been victimized by unscrupulous investment bankers and faces an unprecedented financial crisis."
The banks named in the suit include JPMorgan Chase & Co. (JPM.N: Quote, Profile, Research, Stock Buzz) and Goldman Sachs Capital Markets Inc (GS.N: Quote, Profile, Research, Stock Buzz).
The lawsuit comes as creditors and county officials negotiate on a possible restructuring of $3.2 billion of Jefferson County debt obligations.
With the help of Alabama Gov. Bob Riley, creditors and county officials a week ago agreed to bargain further on a restructuring of the debt and backed away from a possible Chapter 9 municipal bankruptcy filing by Jefferson County.
Such a filing by Jefferson County would be the biggest by a U.S. local government since Orange County, California, filed for protection in December 1994. "(snip)



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