The economic crisis has hit public finance hard, with deals delayed, financing troubles for issuers, and job cuts at many Wall Street firms. But despite the turmoil, many mid-market and local investment banks have continued to expand their public finance departments, saying the current crisis has opened up many opportunities.

Over the past 10 months, Bear, Stearns & Co. was purchased by JPMorgan, UBS Securities LLC closed its public finance department, and Bank of America Corp. acquired Merrill Lynch & Co. With the decrease in number of large banks involved in public finance, market participants say smaller banks are in a good position to benefit in the future.

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