Congress has potentially changed the structure of the tax-exempt bond market by creating a taxable Build America Bond program that will likely be continued and expanded, thereby limiting the use of tax-exempt bonds for short-term and other specific kinds of financings, a University of Miami law professor claimed yesterday.

“I don’t think that anybody really thinks there was a conspiracy to eliminate tax-exempt financing,” Stanley Langbein said during a teleconference sponsored by the American Bar Association’s committee on tax-exempt financing and section on state and local government law. “But we’ve already seen in the market that the presence of Build America Bonds cuts down the supply of ordinary of tax-exempt bonds.”

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