In a recent article, the Atlanta Journal-Constitution explored the differences between Wall Street-engineered upgrades to water and sewer systems in Atlanta and Birmingham. While the financial programs were similar, Jefferson County, where Birmingham is located, recently filed for bankruptcy due to risky mortgage-backed securities that funded the upgrades. Many residents are now blaming city officials for “falling for Wall Street's financial schemes.”
Professor David Reiss, an expert on real estate and consumer finance law who has extensively covered the nation's mortgage crisis, commented on the situation. “Local officials are tempted by apparently easy money cloaked in newfangled terms,” he said. “They sometimes willingly suspend their disbelief in things that are too good to be true. And investment bankers remain true to their timeless temptation: profits and bonuses, pushing products that may be inappropriate on local officials, some of whom bite.”
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