BIRMINGHAM, Ala.  In 2002, a banker named Charles E. LeCroy arrived here with a novel pitch to ease taxpayers’ burden. Some Wall Street wizardry, he said, could lighten their load.

Six years on, officials here are still struggling to untangle the financial web that Mr. LeCroy and his fellow bankers spun. Jefferson County is teetering on the brink of bankruptcy after a series of exotic bond deals that the bankers concocted went wrong, and the interest on its debts, rather than shrinking as the bankers had promised, has ballooned like a bad subprime mortgage.

Officials from Birmingham, the county seat, are trying to persuade Wall Street creditors to let them soften the terms of the deals. If they fail, the county could sink into in one of the biggest public bankruptcies in American history.

The running credit crisis and looming recession are squeezing communities across the country. But perhaps nothing else comes close to the financial fiasco unfolding here.