Law and legal issues

WASHINGTON - Moody's Investors Service has placed $2.2 billion of the Maryland Community Development Administration's Aa2-rated residential revenue bonds on watch for a possible downgrade.

SAN FRANCISCO - Fitch Ratings downgraded California's general obligation bonds two notches to BBB from A-minus yesterday, pushing the state's lease-backed debt to the lowest investment grade, BBB-minus.

SAN FRANCISCO - California IOUs will pay a 3.75% annualized interest rate to the creditors who receive them, the state's Pooled Money Investment Board decided last week. The interest is tax-exempt.

WASHINGTON - Primary and secondary market trading for Build America Bonds totaled $23 billion on 30,633 trades, according to a report released Thursday by the Municipal Securities Rulemaking Board.

SAN FRANCISCO - California is poised to begin paying some bills with IOUs today after efforts to pass budget-balancing legislation before a Tuesday night deadline failed.

SAN FRANCISCO - The El Monte, Calif., City Council decided not to declare bankruptcy after winning concessions from public employees to balance its 2009-2010 budget on Tuesday.

The Financial Industry Regulatory Authority yesterday announced that it has launched three fact-finding sweeps tied to the municipal securities market, including an enforcement sweep to examine firms' potential conflicts, disclosure practices, and marketing of derivatives to small and unsophisticated municipalities.

DALLAS - Two developers pleaded guilty to federal charges that they bribed Dallas officials to approve low-income apartment projects financed with tax-exempt private-activity bonds.

BRADENTON, Fla. - The Bank of New York Mellon said in a court filing late Monday that it would file suit in Alabama state court to push for a receiver for Jefferson County's sewer system, which is plagued by more than $3.2 billion of troubled variable- and auction-rate debt.

SAN FRANCISCO - The Government Accounting Standards Board last week issued an exposure draft on new accounting standards for bankrupt municipalities.

SAN FRANCISCO - A federal appeals court late last week unanimously upheld a lower court ruling that Vallejo, Calif., is eligible for bankruptcy protection.

DALLAS - Arizona lawmakers tried to hurry a budget compromise through the Legislature before today's deadline, but legislative leaders and Gov. Jan Brewer prepared for a partial shutdown of the government in case the measure does not pass.

BRADENTON, Fla. - Speculation about whether Jefferson County, Ala., might file for bankruptcy rose to new heights late last week when Alabama's high court refused to allow the financially ailing county to spend occupational tax revenues while appealing a lower-court ruling that struck down the tax earlier this year.

WASHINGTON - Ronald Stack is leaving Barclays Capital to join Wells Fargo & Co., where he will head the northeast group in their public finance department, sources said.Stack, who is chairman of the Municipal Securities Rulemaking Board this year, has been a managing director at Barclays and head of the firm's New York state underwriting business since last fall after Lehman Brothers collapsed and Barclays bought its North American sales, trading, research, and investment banking businesses.

WASHINGTON - The amount of tax-exempt debt that went into default in 2008 spiked to record levels equaling about 2% of the year's total dollar amount of new issuance, and 2009 is on track for another high level of defaults, according to market participants who track them.

WASHINGTON - The Securities and Exchange Commission voted unanimously yesterday to propose sweeping changes to the way tax-exempt and other money market funds are regulated in response to the financial crisis and the unprecedented havoc caused by the run on a taxable fund last fall.

DALLAS - With the end of the fiscal year just five days away, Arizona's $8.2 billion budget remains in limbo after the state Supreme Court failed to end a standoff between Gov. Jan Brewer and legislative leaders.

A House Financial Services Committee hearing on the proposed creation of a consumer protection agency posed more questions than it answered about how the new regulator would function and how disputes would be resolved between it and existing regulators.

SAN FRANCISCO - Proposals from both the governor and the Legislature to close California's budget deficit include stripping the share of state fuel-tax revenue that currently goes to local governments.

WASHINGTON - Over-the-counter derivatives that are securities-based should be regulated under federal securities laws by the Securities and Exchange Commission, SEC chairman Mary Schapiro told a Senate panel yesterday.