Bankruptcy

CHICAGO - The Illinois Supreme Court yesterday shot down Attorney General Lisa Madigan's requests that the court declare Gov. Rod Blagojevich unfit to govern following his arrest last week on federal corruption charges.

DALLAS - The U.S. Justice Department is investigating a 2002 bond sale by the University of New Mexico as part of an investigation into possible violations of securities laws, officials said.

CHICAGO - The fiscal costs of the political turmoil resulting from Illinois Gov. Rod Blagojevich's arrest last week on federal corruption charges continued to mount this week as Fitch Ratings downgraded the state, in part due to concerns the scandal might impede its ability to resolve a $2 billion deficit.

The Financial Industry Regulatory Authority yesterday detailed a special arbitration procedure for investors who suffered "consequential damages," such as losses that resulted from their inability to liquidate their auction-rate securities for cash.

BRADENTON, Fla. - Facing the prospect of increasing sewer rates nearly 400% to pay debt service, the Jefferson County, Ala., Commission yesterday unanimously voted to suspend automatic sewer rate increases.

WASHINGTON - The Supreme Court yesterday removed a legal barrier to tobacco lawsuits filed over the allegedly deceptive marketing of "light" cigarettes, allowing for suits based on certain state deceptive practice laws to move forward.

WASHINGTON - Justice Department officials, a spokesman for New Mexico Gov. Bill Richardson, and representatives of President-elect Barack Obama yesterday declined to comment on reports that a federal grand jury in Albuquerque is investigating whether swap adviser CDR Financial Products Inc. made payments to political action committees run by Richardson in exchange for state municipal derivatives business.

WASHINGTON - The Municipal Securities Rulemaking Board has hired Margaret "Peg" Henry as an associate general counsel.

WASHINGTON - In a potentially precedent-setting case that will determine how municipal and other derivatives are treated in bankruptcy proceedings, a federal bankruptcy court in Manhattan is to hold a hearing tomorrow to determine the fate of some 930,000 municipal and other derivatives contracts involving Lehman Brothers, which made the largest bankruptcy filing in history on Sept. 15.

CHICAGO - Illinois Attorney General Lisa Madigan on Friday asked the the state's Supreme Court to either temporarily remove Gov. Rod Blagojevich from office or strip him of his power to fill President-elect Barack Obama's vacant Senate seat, act on legislation, or award state contracts.

The Securities and Exchange Commission yesterday announced final auction-rate securities settlements with Citigroup Global Markets Inc. and UBS AG that will provide $30 billion of liquidity to investors who have been stuck holding illiquid ARS since the market froze in February.

CHICAGO - Chicago Mayor Richard Daley yesterday tapped chief financial officer Paul A. Volpe to serve as his chief of staff, filling a position being vacated by Lori Healey, who will take on a leadership role at the Chicago 2016 Olympic organizing committee.

Federal Reserve Board chairman Ben Bernanke is suggesting that state and local governments facing fiscal difficulties seek grants, loans, or guarantees from the Treasury, while a Treasury official contends they should ask the Fed about participating in its commercial paper purchasing program.

CHICAGO - Illinois Gov. Rod Blagojevich and his chief of staff, John Harris, yesterday were arrested and hit with federal corruption charges in a stunning complaint that alleges the governor engaged in pay-to-play schemes and conspired to trade or sell his selection of a Senate replacement for President-elect Barack Obama for personal gain.

BRADENTON, Fla. - Jefferson County, Ala., commissioners yesterday approved 11 forbearance agreements delaying sewer debt and swap payments until Feb. 20.

SAN FRANCISCO - If California lawmakers do not close the deficit in the state's approved budget, California could run out of cash and be forced to pay its bills with IOUs beginning in March, according to Controller John Chiang.

Municipal market participants said yesterday that they will need to boost outreach to smaller issuers in light of changes to the Securities and Exchange Commission's disclosure rules, which will require some of them to file annual financial information with the Municipal Securities Rulemaking Board's EMMA system.

BRADENTON, Fla. - Jefferson County, Ala., commissioners today will be asked in a special meeting to extend forbearance agreements on the county's ailing sewer system debt delaying payments until Feb. 20, 2009.

The National Association of Bond Lawyers has chosen Victoria P. "Penny" Rostow, a former bank lobbyist and Treasury Department official, to become its director of governmental affairs.

SAN FRANCISCO - The California Redevelopment Association has filed a lawsuit challenging a $350 million shift from redevelopment agencies to the state government.