Law and legal issues

WASHINGTON - The Obama administration is close to unveiling a temporary liquidity facility for variable-rate demand obligations sold by state, and possibly local, housing finance agencies, knowledgeable sources said yesterday.

WASHINGTON - The Securities and Exchange Commission may propose rules as early as next month to boost the credit quality and shorten the maturity of eligible money-market fund investments, chairman Mary Schapiro said yesterday.

DALLAS - A state constitutional cap on the amount of bond interest that Arkansas state and local governments can pay is curtailing their ability to issue debt.

LOS ANGELES - Municipal bond issuers have measured their other post-employment benefit liabilities, reported them on their financial statements, and come to a conclusion: Most can't pay what they've promised.

LOS ANGELES - California's budget problems got $350 million bigger last week, following a court decision that will boost the state's redevelopment agencies by the same amount.

WASHINGTON - Tennessee Comptroller Justin Wilson on Friday proposed sweeping changes to municipal finance guidelines in an attempt to restrict small, unsophisticated issuers in the state from entering into complex derivatives and other transactions they may not understand.

WASHINGTON - House Financial Services Committee chairman Barney Frank is delaying until late May a hearing on an omnibus municipal bond bill that his staff is drafting. He had originally planned to consider the bill on May 5.

Jefferson County has finally asked Alabama lawmakers for assistance to help it pay off its troubled $3.2 billion of sewer debt. County commissioners made the request Tuesday as the Legislature is winding down its annual session over the next two weeks.

Lawmakers will likely move towards establishing federal oversight of the insurance industry, but they should take a deliberative approach to reforming financial regulatory structure in general, a top Democrat on the House Financial Services Committee said yesterday.

CHICAGO - A commission created by Illinois Gov. Pat Quinn to overhaul government after his predecessor's arrest on pay-to-play charges called for sweeping reforms yesterday that would cap campaign contributions, impose term limits on legislative leaders, and tighten how state business is doled out and how lawmakers vote on the budget.

The Municipal Securities Rulemaking Board proposed changes to its Rule G-8 on books and records yesterday that would require dealers to maintain records related to municipal auction-rate securities and variable-rate demand obligations.

SAN FRANCISCO - U.S. District Bankruptcy Judge Michael McManus ordered Vallejo, Calif., and two labor unions into mediation, delaying a ruling on the city's bankruptcy court motion to reject its union contracts in a final effort to force the sides to come to an agreement.

DALLAS - Moody's Investors Service has lowered its ratings on $270 million of Jefferson County, Ala.'s general obligation debt to Caa1 from B3. The agency also lowered to Caa2 from Caa1 the rating on $86.7 million in outstanding lease revenue warrants issued through the Jefferson County Public Building Authority.

WASHINGTON - The American Bankers Association is warning that the use of Cusip identification numbers as part of the Municipal Securities Rulemaking Board's EMMA system violates the ABA's intellectual property and contractual rights and that EMMA should not move forward until these legal hurdles are resolved.

WASHINGTON - Municipal issuers continued to be plagued by downward credit pressure in the first quarter of 2009 as downgrades began to eclipse upgrades in major muni sectors, which face negative outlooks going forwards, Moody's Investors Service said in a report issued yesterday.

CHICAGO - While some Cook County, Ill., commissioners are worried that a political scandal over the sudden departure of the county's chief financial officer could affect its bond rating, credit analysts say that's unlikely and are more concerned about the potential impact of a proposed cutback in the unpopular sales tax hike pushed through last year.

WASHINGTON - The Municipal Securities Rulemaking Board issued guidance Friday reminding dealers that its rules apply to Build America Bonds authorized in the $787 billion stimulus package, even though BABs are taxable and may be sold through dealers' corporate bond desks.

SAN FRANCISCO - Having suffered two court defeats already, backers of a Las Vegas ballot measure that would upend Nevada redevelopment and lease-revenue bond laws have filed a last-ditch appeal to the state Supreme Court.

President Obama on Friday ratcheted up his push to eliminate the Federal Family Education Loan program, saying he's prepared to fight "wasteful subsidies" to student lenders..

WASHINGTON - House Financial Services Committee chairman Barney Frank is "reassessing" and may drop the inclusion of federal guarantees for general obligation debt that he originally planned to include in an omnibus municipal securities bill his staff is drafting, congressional sources familiar with the matter said.