Sad tale: When Wall Street hits Main Street

A banker at JPMorgan was a darn good salesman; he persuaded local officials in Jefferson County, AL to convert a lot of debt to adjustable rates and hedge with swaps--to the tune of $5.4 billion, according to the New York Times. However, the hedging got way out of control, and the result was disastrous. Last week, the county said it did not have enough in coffers to continue paying the costs of the hedges. The SEC is looking into the mess. We may hear a lot more from municipalities and counties that watch their finances deteriorate. Wall Street really saw this as a growth opportunity. Some liken it to a cheesy subprime sale to unsuspecting people. As for the JPMorgan banker, he's now in jail for unrelated financial crimes related to another county.

For more:
- here's the New York Times article

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