Bankruptcy

Money market mutual funds are expected to all participate in the Treasury Department's temporary guaranty program, which will cover investors' assets in the funds as of the end of Sept. 19, analysts said.

BRADENTON, Fla. - Alabama Gov. Bob Riley has asked the newly created Troubled Asset Relief Program within the Treasury Department to provide a backstop for Jefferson County's sewer debt restructuring plan.

WASHINGTON - The Federal Reserve announced yesterday that it will buy commercial paper directly from issuers to provide liquidity to the short-term market, prompting officials from Massachusetts and other states to say they may push to participate in the program.

The Securities and Exchange Commission has had to put its initiatives to improve municipal disclosure and accounting standards on the back burner because of the ongoing credit crisis, but still plans to propose changes to its disclosure regulations, the SEC's municipal securities chief said this week.

Washington - The Supreme Court heard arguments yesterday in a case that could determine whether tobacco companies may face new liabilities from smoker lawsuits filed over the alleged deceptive marketing of "light" cigarettes under state laws.

BRADENTON, Fla. - An analyst yesterday recommended that investors "be highly cautious in purchasing any bonds" issued by Alabama or its localities as two Jefferson County commissioners pushed once again to file what would be the largest municipal bankruptcy ever in the U.S.

Liquidity in the short-term market has dried up to the point where "there's pretty much a total lack" of banks willing to provide issuers with letters of credit or standby bond purchase facilities, the executive director of the Municipal Securities Rulemaking Board said yesterday.

LAS VEGAS - A California state Treasury official - facing the need to borrow $7 billion in the short-term markets this month - expressed optimism that the $700 billion bailout enacted Friday would get the markets working again.

A federal judge in Birmingham Friday scheduled a hearing on Nov. 17 in a lawsuit seeking the appointment of a receiver for Jefferson County, Ala.’s troubled sewer system, according to a report in the Birmingham News.

With the Aug. 7 announcement by the Maryland Insurance Administration regarding the restructuring of ACA Financial Guaranty, there are questions in the market about how it was designed, how it will work, and whether or not it should serve as an example for future restructurings.

WASHINGTON - The Brazos Higher Education Service Corp., one of the largest nonprofit student loan lenders in the country, may be the first to ask its institutional investors to voluntarily tender, at less than par, roughly $6 billion of outstanding taxable student-loan related auction-rate securities so that it can restructure them as term floating-rate notes.

Delayed progress of the federal government's market bailout continues to restrict state and local governments' abilities to raise money, Massachusetts Treasurer Timothy Cahill said yesterday.

A lawsuit filed by New Orleans alleging that "mismanagement" and "greed" at Ambac Assurance Corp. cost the city millions of dollars is nothing more than "a lot of sound and fury," the insurer said in a motion seeking dismissal of the case earlier this week.

BRADENTON, Fla. - Jefferson County commissioners yesterday voted 3 to 2 to approve a seven-day extension of its forbearance agreements with banks and swap counterparties at the request of Alabama Gov. Bob Riley.

WASHINGTON - Morgan Stanley announced Monday it will refinance illiquid auction-rate preferred shares with tender options bonds, created from municipal securities in 10 of its closed-end municipal funds, to escape high interest rates and provide liquidity to its auction-rate securities investors.

CHICAGO - Five southeastern Wisconsin school districts this week filed a lawsuit against Stifel Nicolaus & Co. and the Royal Bank of Canada, alleging that the firms fraudulently misrepresented the safety of an investment transaction involving synthetic collateralized debt obligations, resulting in about $150 million in losses.

Stephen R. Moynahan has been barred from acting as a supervisor at a broker-dealer firm, suspended from the dealer community for six months, and ordered to pay $140,000 under a settlement of Securities and Exchange Commission charges that he failed to supervise Robert J. Bradbury, the former head of Dolphin & Bradbury Inc., who allegedly defrauded Pennsylvania school districts.

BRADENTON, Fla. - As Jefferson County, Ala., commissioners meet today to consider a seven-day extension of their sewer and general obligation forbearance agreements, officials face a protracted and expensive legal battle in federal court as creditors seek proposals from potential receivers to run the financially troubled system, according to a legal expert.

Ronald A. Stack, managing director and head of finance at Barclays Capital in New York, became chairman of the Municipal Securities Rulemaking Board yesterday, less than two weeks after his former firm, Lehman Brothers Inc., filed for bankruptcy protection.

WASHINGTON - Lawmakers are considering extending the Treasury Department's federal guaranty program for money market mutual funds, suspending fair value accounting, and raising the deposit insurance limit at banks, in an effort to convince at least 12 members to change their votes on legislation designed to calm the financial markets.