Bankruptcy

ALAMEDA, Calif. — Four unions representing California state employees agreed to contracts that require workers to contribute more to their pensions and provide less generous benefits to future hires, Gov. Arnold Schwarzenegger announced Wednesday afternoon.

A bill designed to make it harder for California cities and local agencies to file for Chapter 9 municipal bankruptcy has been put on the shelf, at least for now.

The San Diego mayor’s office has an emphatic response to a recent report advising the city to explore the bankruptcy process as an avenue to reduce its pension and employee retirement liabilities.

Mercer LLC will pay the Alaska Retirement Management Board $500 million to settle a lawsuit accusing the firm of negligence that contributed to the multi-billion unfunded liabilities of the state’s employee pension funds.

CHICAGO — Prosecutors in the federal corruption trial of former Illinois Gov. Rod Blagojevich sought in testimony this week to link a loan to businessman Joseph Aramanda from consultant Robert Kjellander to an alleged scheme by Blagojevich and three associates to personally profit from the state’s $10 billion pension bond sale.

WASHINGTON — The Securities and Exchange Commission is stepping up its enforcement efforts in the municipal securities market for the first time in more than a decade, with a staff of roughly 30 attorneys charged with investigating and trying muni and public pension fund cases.

House conferees meeting to hammer out compromise financial regulatory reform legislation potentially handed the Securities and Exchange Commission at least two significant victories yesterday: the authority to self-fund its operations without annual appropriations from Congress and the authority to register and regulate municipal financial advisers.

The Financial Industry Regulatory Authority has censured and fined Credit Suisse Securities LLC $10,000 for improper or late reporting of municipal securities trades.

WASHINGTON — House conferees debating financial regulatory reform legislation today are expected to vote on amendments that would require the Securities and Exchange Commission to register and regulate municipal financial advisers, replacing Senate language that would give such regulatory authority to the Municipal Securities Rulemaking Board.

CHICAGO — Ohio’s bankrupt Forum Health this week announced an agreement to sell its assets to a for-profit health care provider, marking the third proposed sale of a financially struggling nonprofit provider to a for-profit entity in the last few months.

The Treasury Department should issue guidance on the definition of issue price for Build America Bonds and proceed with 10 other regulatory projects on a priority basis, the National Association of Bond Lawyers told department officials in a recent letter.

WASHINGTON — Municipal market regulatory issues will not be studied for up to two years under changes to the base legislation Senate and House conferees are using to reconcile their competing legislative proposals to overhaul financial regulations.

A new law heading to Rhode Island Gov. Donald Carcieri’s desk for his signature is intended to bring the insolvent city of Central Falls out of receivership and under a new state oversight regime.

DALLAS — Louisiana Treasurer John N. Kennedy has urged Gov. Bobby Jindal to develop a financial contingency plan in case BP Corporation North America Inc. declares bankruptcy due to the enormous costs associated with its oil spill in the Gulf of Mexico.

Twelve states, including California, impose no restrictions on municipalities’ ability to file for Chapter 9 bankruptcy. On the other extreme, there are three states that do not allow local Chapter 9 filings and more than 20 that are silent on the matter, which is generally considered a prohibition.

CHICAGO — Former Illinois Gov. Rod Blagojevich and several associates expected to reap $500,000 from an $809,000 consultant’s fee paid by Bear, Stearns & Co. for its role as book-runner on the state’s $10 billion 2003 pension bond sale, an aide said in testimony this week during the disgraced ex-governor’s federal corruption trial.

HARRISBURG, Pa. - Pennsylvania Gov. Edward Rendell Wednesday night urged the Harrisburg city council to lease municipal assets to meet debt obligations rather than filing for bankruptcy or seeking state oversight under Act 47.

ATLANTA — Dealers are calling for the Municipal Securities Rulemaking Board to revise and clarify several aspects of draft interpretive guidance that outlines the steps they must take to ensure the prices they charge customers when buying and selling municipal securities are fair and reasonable.

ATLANTA — Municipal issuers are overreacting to recent developments surrounding the compliance program for Build America Bonds, a Treasury official said yesterday in an effort to tamp down ongoing concerns.

The Government Finance Officers Association approved policy statements Tuesday calling on the Governmental Accounting Standards Board not to move forward with its “fiscal sustainability” project and for the Securities and Exchange Commission to scrap plans to consider requiring floating net asset values for shares of money market funds.