“We filed the declaratory judgment action because there are significant legal issues associated with the swap transaction,” Main, the authority’s secretary, said in a statement e-mailed to reporters. “It would not be proper for me to authorize the use of taxpayer money for any payment due under the agreements until the court resolves those issues and determines our rights and obligations.”In October a lawsuit was filed in Montgomery, AL district court saying that a sale of a swaption (option on an interest-rate swap) wasn't allowed under state law. The deal had been executed in connection with bonds sold by the Alabama Public School and College Authority.
Aside from the obvious implication that this is a preamble to a likely county default (how bad off do you have to be to be unable to pay a few hundred Gs on a swaption deal), especially after Moody's local government downgrade warning, the real question is what the hell are Alabama residents doing trading swaptions? Probably the same reason we have had a "bull market" for the past month. Sphere: Related Content
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CDS market’s Big Bang arrives
http://tinyurl.com/culco6
Interesting headline. LOL
What the hell is JPM selling swaptions to the Alabama State School Construction Authority?
And outside of printing press central (NYC), a few hundred Gs is still a lot of money.
hot money=pension funds+ muni money
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Good for a laugh. thx
Thank you for some great reporting.... girlcantrade.blogspot.com
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And don't even start with that Kudlow China/Iran story. It has bullshit written all over it. I don't wanna see it in overallotment or frontrunning.
A Chinese company sells to Iran Aluminum, Tungsten, and Steel and the US claims that they can make weapons from these magic metals and violated laws by funneling the transactions through a US bank.
Sounds like we need negative China sentement so that we can default on the some very large debts and walk with a clear national conscience.
This blog is beginning to become one of my favorites. Keep up the good work!!
"... the real question is what the hell are Alabama residents doing trading swaptions? Probably the same reason we have had a "bull market" for the past month." Hehe, that's funny, but sad too.
Thank God for Mississippi, as they say in Alabama...
Woo-Hoo!!
JPM looted Jefferson county AL to the brink of default with interest rate swaps and other instruments to help them creatively finance their sewer systems to be compliant with new EPA regulations in 1997.
In fact, these banksters lobbied vigorously and successfully in many other states to be able to sell these unregulated instruments to state agencies by 2003-2004. Alabama was not mentioned as being one of those states. But other forward-thinking states, went so far as to have annual state conventions introducing the wonders of how these new financial products could benefit state and local agencies.
As of Aug 08, Jefferson County did not know what to do with JPM, nor did JPM know what to do about Jeff county. far as I know, that is still up in the air, but if the default it will be many times the size of Orange county 1994
How can you find out which states entered into these derivatives contracts?
Alabama better be careful. The Banksters always win, eventually.
Heh heh heh!
http://tiny.cc/c0CjG
In all fairness, Alabama is one of the largest banking centers in the U.S., and has been the second largest up until just the last few years. That does not imply that the decisions made there are all quality - Jefferson County made idiotic decisions on their sewer issues, and Lehman Brothers was started in Montgomery - but it's probably unfair to label the entire state as being incapable of understanding a swaption. The more interesting question is what were the politician's qualifications who made the deal - did he understand swaptions? Has he been fired yet? (same goes for the sewer bonds mentioned by Anonymous above - that guy has not been fired)
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