Washington

Washington Gov. Chris Gregoire planned to sign a bill Tuesday that would resolve about one-quarter of the state's $2 billion budget deficit.

The Securities and Exchange Commission has approved Municipal Securities Rulemaking Board changes to Rule G-16 that would require muni broker-dealers that pose more risks to undergo compliance examinations more frequently, possibly as often as every year.

The future of Medicaid, which eats up nearly a quarter of states' budgets, will play a key role in governments' fiscal health over the next several years, Standard & Poor's said in a new report on the federal program.

Having already assigned a negative outlook to Garvees, Fitch Ratings said downgrades could occur for such bonds without a backup pledge of revenues if lawmakers don't approve a longer-term reauthorization of highway and other surface transportation programs by March 31.

Republicans complained about the skyrocketing cost and lack of administrative transparency surrounding the construction of the California high-speed rail project, while Democrats and regulators steadfastly defended the partially bond-financed project as an antidote to gridlock and a way to create jobs.

After an arena in Washington State defaulted earlier this month, investors still got paid, but it is unclear who made the mistake.

Market participants urged the Municipal Securities Rulemaking Board to broaden the definition of "sophisticated municipal market professional," saying it should include individuals with muni or fixed-income assets of $25 million, or $50 million in munis and other assets, not $50 million in munis, as the board had proposed.

Due to ongoing budgetary uncertainties, the Securities and Exchange Commission is seeking to lead its municipal securities office with a director who does not report directly to SEC chairman Mary Schapiro, as was mandated by the financial reform law enacted last year.

Washington lawmakers are considering a bipartisan plan that would reduce the state's $2 billion budget shortfall by about one-quarter.

A federal court in New Jersey has approved a $46 million settlement between Wachovia Bank NA, now Wells Fargo Bank NA, and the Securities and Exchange Commission over bid-rigging of municipal-bond related contracts as well as the amounts of restitution that are to go to each of the almost 60 state and local issuers that were defrauded.

U.S. Bank is clawing back debt-service payments it erroneously paid investors after a public arena in eastern Washington defaulted.

Two Republican members of the Securities and Exchange Commission have stalled the Municipal Securities Rulemaking Board's proposed G-17 guidance on fair dealing for underwriters, saying they need more time to analyze the proposal, according to sources.

The Securities and Exchange Commission said late Thursday that it is a "statutory party in interest" in Jefferson County, Ala.'s bankruptcy case and wants to receive all notices and documents filed with the court.

Wachovia Bank NA, now Wells Fargo Bank NA, has agreed to pay $148 million to settle securities, tax and other federal and state law violations stemming from fraudulently engaging in secret arrangements with bidding agents to win business from municipalities and profits for itself from the reinvestment of muni proceeds.

A bill meant to rescue a Wenatchee public arena from its default on $42 million of notes passed the Washington House Monday. But the measure appeared to lack the votes to pass the Senate during the special session that lasts until Christmas vacation.

The Internal Revenue Service has ruled that a nonprofit health care system cannot use tax-exempt bonds to pay off the debt of a for-profit subsidiary that financed the development of a wellness and fitness facility, even though the facility was donated to another nonprofit organization.

Other financial industry groups lobby Washington lawmakers and regulators about the issues that affect the municipal securities markets, but few can match SIFMA's resources.

As Jefferson County, Ala., teetered on the edge of bankruptcy for much of this year, a financial industry group plowed more than $4 million into lobbying Washington lawmakers and regulators to dilute provisions of the reform law enacted last year to curb the kinds of abuses that helped trigger the municipality's fiscal distress.

SIFMA's highest-paid outside lobbyist this year, Ernst & Young LLP in Washington, received $240,000 through September for activities in the House, the Senate, and the Treasury Department on miscellaneous corporate tax issues related to financial services, according to its disclosure reports.

State treasurers voiced concerns about a proposal unveiled by the Governmental Accounting Standards Board that recommends they provide five-year projections of cash flows and information about future financial obligations.