The treasurer of California, the largest municipal bond issuer in the nation, is urging federal lawmakers to amend the pending financial regulatory reform bill to require buyers of municipal credit default swaps to have actual exposure to the issuer’s underlying securities.

Bill Lockyer made the request in a three-page letter sent to Senate Banking Committee chairman Christopher Dodd, D-Conn. and other House and Senate lawmakers, saying such an amendment would prevent the speculative trading that could drive up borrowing costs for muni bond issuers.

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