WASHINGTON - The Securities Industry and Financial Markets Association is urging the Obama administration and key Democratic lawmakers to address liquidity problems in the municipal and auction-rate securities markets by developing a federally supported insurer or reinsurer and a facility to provide letters of credit or standby bond purchase agreements.

In identical letters sent to House Financial Services Committee chairman Barney Frank, D-Mass., and Senate Banking Committee chairman Christopher Dodd, D-Conn., SIFMA said the federal government should also consider: developing a commercial paper purchase facility to buy muni debt, similar to the Federal Reserve's Commercial Paper Funding Facility, which is currently closed to tax-exempt paper; authorizing $200 billion to start new state revolving fund programs for municipal financings; modifying restrictions on pension fund investments in in-state tax-exempt bond funds; and appointing a contact at Treasury to monitor the economic functioning of the muni market.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.