Credit crunch hits Raleigh for $730,000 and more

The construction of Raleigh's new convention center may be complete, but the cost continues to rise because of the worldwide credit crunch.

In recent weeks, the bonds issued to pay for the convention center have become unmarketable because they are affiliated with a bank, Depfa, whose German parent company has been near collapse since September.

Through no fault of its own, Raleigh now finds itself paying for the bad bets made by a bank on another continent.

"It's all because of Depfa," said Perry James III, Raleigh's chief financial officer.

The city of Raleigh is one of many state and local governments, including the New York City Metropolitan Transit Authority and the Michigan State Building Authority, that face rising finance bills because they hired Depfa as the buyer of last resort for their bonds.

The bank wrote $1.7 billion worth of such policies in 2007, making it the third-largest provider to U.S. municipalities last year, according to Municipal Market Advisors.

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