Bankruptcy

CHICAGO - With Illinois' political ethics getting national scrutiny, the state Senate yesterday approved a series of reforms pushed by Gov. Rod Blagojevich one day after the chamber unanimously overrode his veto of a first-time ban on campaign contributions from contractors with large state contracts.

WASHINGTON - Leaders of the Senate Banking Committee insisted yesterday that the Bush administration modify its proposed $700 billion bailout of the financial industry to include transparency, stronger accountability, and assistance for existing homeowners. Meanwhile, federal officials warned that Congress must approve a plan that avoids restrictions and gives the government as much flexibility as possible in order to avoid a financial meltdown.

SAN FRANCISCO - Unions representing Vallejo, Calif., employees have appealed a bankruptcy judge's ruling that the city is in fact bankrupt.

WASHINGTON - The Treasury Department sent waves of relief through the municipal market yesterday by making clear that tax-free funds can participate in its recently announced $50 billion temporary insurance program for money market funds without jeopardizing the tax-exempt status of the muni bonds they hold.

BRADENTON, Fla. - Jefferson County, Ala., commissioners yesterday approved their first forbearance agreement with creditors other than those involved with the county's troubled sewer warrants.

WASHINGTON - Congressional leaders said yesterday that they are close to hammering out an agreement with the Bush administration on legislation that would give the secretary of the Treasury broad authority to purchase up to $700 billion of "troubled" securities sold by financial firms, including illiquid auction-rate securities issued by state and local governments.

WASHINGTON – The Treasury Department announced Sunday night that tax-exempt money market mutual funds will be included under its temporary $50 billion insurance program for money market funds that it unveiled Friday, providing urgently-sought relief to market participants.

CHICAGO - The market for variable-rate demand obligations was calmer Friday after experiencing one of its rockiest weeks in recent memory, with weekly and daily remarketings failing for some outstanding issues and interest rates skyrocketing for others.

Ambac Financial Group Inc. said Friday night it will postpone its planned $850 million recapitalization of subsidiary Connie Lee Insurance Co. following Moody's Investors Service decision Thursday to place the Aa3 rating of Ambac Assurance Corp. on review for possible downgrade.

BRADENTON, Fla. - The Jefferson County commission was set to hold a special meeting this morning to approve a forbearance agreement and response to the lawsuit filed last week seeking a receiver for the Alabama county's troubled sewer system.

BRADENTON, Fla. - The Florida Supreme Court yesterday reversed itself and said it is constitutional for tax increment financing bonds to be issued without first holding a public referendum, upholding decades of case law on the issue in the state.

WASHINGTON - Questions over whether inflated land values were used by New York City in its pursuit of tax-exempt bonds for the new Yankee Stadium could imperil the bonds' tax-exempt status, witnesses suggested at a hearing here yesterday. But the agency that issued the bonds said the city used standard procedures in its assessments and attributed the differences to different assumptions used in relation to different purposes for the assessments.

CHICAGO - Municipal issuers must file material event notices when the ratings on their bonds are downgraded, even if credit rating agencies don't formally notify them that their bonds' ratings have changed, a Securities and Exchange Commission enforcement attorney said yesterday.

House Financial Services Committee chairman Barney Frank, D-Mass., called for new rules to curb abuses in the auction-rate securities market at a hearing yesterday, as federal and state regulators indicated the ARS market is virtually dead and would require major structural changes to regain liquidity.

CHICAGO - As the municipal market grapples with the largest reordering of the financial markets in history, the National Association of Bond Lawyers plans to work closely with its members in the coming days to help sort out the numerous unanswered questions facing their clients, William Holby, who took over as NABL's new president last night, said in an interview this week.

BRADENTON, Fla. - After more than seven months of negotiations, Jefferson County's major bond insurers and the trustee for bondholders have filed a lawsuit asking a judge to appoint a receiver for the Alabama county's sewer system, which is saddled with $3.2 billion of troubled debt and $5.2 billion of swaps.

CHICAGO - Professionals in Lehman Brothers' North American investment banking and capital markets operations returned to their jobs yesterday amid the more positive news that British banking giant Barclays PLC will acquire their business from Lehman's bankrupt holding company for $1.75 billion.

CHICAGO - Investor confidence in municipal securities may have been shattered by the "liquidity freeze-up" in the auction-rate securities market earlier this year, as well as the contemporaneous downgrades to most bond insurers that caused the value of insured bonds to plummet, the Securities and Exchange Commission's municipal securities chief Martha Mahan Haines warned bond attorneys gathered here yesterday.

WASHINGTON - Municipal issuers holding swap contracts and hundreds of millions worth of guaranteed-investment contracts with American International Group Inc. are safe and not likely to loose their investments, sources said yesterday, while other municipalities worried what would happen to AIG's large muni holdings.

WASHINGTON - The House Financial Services Committee has canceled a municipal securities disclosure hearing that had been set for Tuesday, joining its counterpart committee in the Senate by scheduling hearings on the financial market crisis for that day.