Congressman Artur Davis Writes Letter to Jefferson County Commissioners, Says Federal Bailout of Jefferson County is Unlikely and Unwarranted

Statement

CONGRESSMAN ARTUR DAVIS WRITES LETTER TO JEFFERSON COUNTY COMMISSIONERS, SAYS FEDERAL BAILOUT OF JEFFERSON COUNTY IS UNLIKELY AND UNWARRANTED

Congressman Artur Davis wrote the following letter to the members of the Jefferson County Commission today after learning that some members favored the idea of a federal bailout of the county's multi-billion dollar sewer debt:

"I was disappointed to read in the September 21, 2008 Birmingham News that some Jefferson County Commissioners harbor expectations of federal intervention to resolve Jefferson County's sewer debt obligations. While these commissioners have not sought out my opinion as a member of Congress, I feel compelled to correct these impressions before they become another excuse for inaction.

"As Congress approaches adjournment, it will be preoccupied with addressing a capital markets crisis that imperils the global economy. There is an overwhelming and bipartisan consensus that a collapse in the capital markets was imminent a few days ago, and that the result would have been an unraveling of the credit structure in this economy. Mortgages could have become virtually unobtainable. The resultant deterioration of credit could also have led to instant corporate shutdowns and job losses unseen in the modern era. There is also widespread agreement that private investments including mutual funds, money markets and 401(k)s could have been devastated in value overnight.

"To put it charitably, it would be unserious to compare these scenarios to the results from a Jefferson County default, and I trust that no Commissioner would expect a member of the Alabama congressional delegation to advance such a farfetched argument.

"I also reject the argument of one commissioner that the federal government is somehow morally bound to intervene on Jefferson County's behalf. In my opinion, the systemic threat to the capital markets is directly tied to Congress' failure to police the markets and the untrammeled speculation that resulted. In contrast, Jefferson County's dilemma is proximately tied to unwise refinancing decisions undertaken with a desire to avoid reductions of services or unpopular increases in revenue. While these decisions were spread over several terms of commissioners, their cumulative effect is a financial crisis very much of the County's own making.

"I have deliberately avoided recommending any course of action for Jefferson County, and I will not do so now, for the simple reason that the voters of the County have not elected me to participate in the Commission's affairs. But it is my understanding that the County has evaluated an extensive range of options, from relinquishing its control of the sewer system, to restructuring the system's fee structure, to an outright declaration of Ch.9 bankruptcy. I would urge the County to make these choices without false illusions that federal intervention is warranted, or remotely possible."

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