Muni Think

A proposal has been made to use a portion of the monies available in the recently announced federal bailout to assist the financial guaranty industry incorporating the "good bank, bad bank" model.

There's no denying the importance of infrastructure. But the traditional infrastructure model has become problematic. The growing need to repair or replace aging infrastructure in transportation, utilities, telecommunications, and other sectors has soared to record levels in recent years. At the same time, the cost of building materials is skyrocketing, and local, state, and federal governments are faced with declining tax revenues and higher borrowing costs.

Asked five years ago what we did for a living, we got blank stares when we responded "carbon trading" and "carbon investing." Now, with everyone from PepsiCo to Google to Pearl Jam striving to offset their carbon footprints, placing a value on carbon reduction has become commonplace.

It is in the nature of things that our most valuable infrastructure projects are economically sound, but often financially unsound.

The municipal market has always had a buyer of last resort. This category of buyer had the capital and the leverage capability to buy municipal bonds when they were attractively priced relative to Treasuries or other appropriate benchmarks. In the absence of the buyer of last resort, the market was vulnerable to getting progressively cheaper relative to other fixed-income markets due to imbalances in supply and demand. From the inception of the market, this important role was filled by the nation's commercial banks.

With the Aug. 7 announcement by the Maryland Insurance Administration regarding the restructuring of ACA Financial Guaranty, there are questions in the market about how it was designed, how it will work, and whether or not it should serve as an example for future restructurings.

When markets function normally, the trustee role is generally treated as an afterthought.

It's tough out there for developers. Rocked by dramatic decreases in home sales and home prices as a result of the real estate market upheaval, developers are desperately seeking cash flow to maintain operations.

The municipal bond industry has experienced enormous growth and change over the last 25 years.

Though rarely seen by human eyes, the White Creek Wind Project in south-central Washington state has been getting some well-deserved attention for providing clean, renewable energy to the region. Hidden from the Columbia River Gorge by rocky bluffs and rolling hills, 89 wind turbines are quietly producing enough electricity to power more than 38,000 homes.