Jeremy Hobson: Now to what's being billed as the largest municipal bankruptcy filing in U.S. history. It happened yesterday in Jefferson County, Ala.

Gigi Douban has more from Birmingham.

Gigi Douban: Jefferson County Manager Tony Petelos says residents shouldn't notice much difference as the county works its way through bankruptcy proceedings.

Tony Petelos: We will continue to provide the services as we have in the past. Our employees will continue to work.

Still, Jefferson County is staring at a $40 million hole in this year's budget.

Andreas Rauterkus teaches finance at the University of Alabama at Birmingham. The county needs to come up with a reorganization plan, and a judge needs to approve it, before creditors know exactly how much money they'll get back.

Andreas Rauterkus: All of it is driven by the county -- the creditors really don't have a lot of input.

Rauterkus says to a big investment bank like JP Morgan Chase, even a billion dollar loss isn't devastating. The real problem, he says, will come when the county need to borrow money in the future and no one wants to lend it to them.

In Birmingham, I'm Gigi Douban for Marketplace.