Law and legal issues

The Municipal Securities Rulemaking Board's net assets rose to just over $28 million for the fiscal year ending Sept. 30, 2008, $3.6 million more than the previous year, according to an audited financial statement and report released by the board yesterday.

BRADENTON, Fla. - The federal judge in Alabama who is considering whether to appoint a receiver for Jefferson County's sewer system will not hold a full hearing as had been expected on Wednesday.

CHICAGO - A federal Second Circuit Appellate Court panel has upheld a lower court decision allowing a majority of investors who held $414 million of Kenton County, Ky., Airport Board bonds issued for Delta Air Lines Inc. to enter into a settlement as part of Delta's 2005 bankruptcy over the objections of a small group of bondholders.

SACRAMENTO - The U.S. Ninth Circuit Bankruptcy Appellate Panel late last week heard Vallejo, Calif., employees' appeal of the city's bankruptcy eligibility.

SAN FRANCISCO - Last summer - during a previous drawn-out California budget crisis - a Bay Area business group floated a trial balloon.

WASHINGTON - The National League of Cities and other government groups claim that states and localities are well suited to create a national nonprofit credit enhancement provider for municipal bonds because they have a long history of establishing pooled insurance programs. But some market participants are concerned that such an entity would be limited in its ability to boost investor demand for munis.

President Obama unveiled a $275 billion housing plan aimed at quelling the foreclosure crisis yesterday that will help provide more liquidity to state housing finance agencies.

DALLAS - Kansas government may shut down by the end of the week after Republican leaders in the Legislature blocked an attempt by Gov. Kathleen Sebelius to borrow $225 million from several funds to cover the state's payroll and issue tax refunds.

WASHINGTON - The $787 billion stimulus package signed into law by President Obama yesterday may spur smaller issuers to increase debt issuance through tax code changes, but may also limit the debt that is sold for transportation, water and wastewater, and other infrastructure projects in the near term because of the new federal funds provided for them.

The Financial Industry Regulatory Authority censured and fined Goldman, Sachs & Co. $17,500 for municipal securities trade reporting violations, the self-regulator revealed yesterday in the latest monthly report of disciplinary actions.

WASHINGTON - Congress is expected within the next two days to pass a $789 billion economic stimulus bill that contains all of the proposed muni bond initiatives, mostly at the larger authorization levels, as well as a new provision that would eliminate the alternative minimum tax for refundings of bonds that were issued during the last five years.

BRADENTON, Fla. - Jefferson County, Ala., commissioner Jim Carns said yesterday that the county should immediately file for bankruptcy to foreclose the possibility of a federal court-appointed receiver for the county's heavily indebted sewer system.

WASHINGTON - The House Financial Services Committee yesterday approved an expansive "oversight agenda" for this year and next that includes examination of a number of municipal market-related issues and could lead to legislation in some cases.

BRADENTON, Fla. - Jefferson County, Ala., commissioners should increase sewer rates 25%, implement a series of revenue enhancements, and continue working toward restructuring the sewer system's massive debt load, two court-appointed masters said Tuesday.

SAN FRANCISCO - California Gov. Arnold Schwarzenegger and legislative leaders reached a budget deal yesterday to close the state's massive two-year, $41.6 billion budget deficit through spending cuts, borrowing, and temporary tax increases.

WASHINGTON - The Municipal Securities Rulemaking Board is urging Congress to give it the authority to regulate independent financial advisers, investment brokers, and other market participants that are currently unregulated but provide key services to state and local issuers.

WASHINGTON - Treasury Department officials yesterday appeared to close the door on providing direct assistance to monoline bond insurers as part of their economic recovery programs.

In a move that will close a case in New York federal court, Pennsylvania's Erie School District has decided not amend its complaint against JPMorgan that accused the company of charging more than $1 million in excess fees on a swaps transaction, according to a letter from the district's attorney filed yesterday.

CHICAGO - A local teachers union has asked Wisconsin's congressional delegation to press federal authorities to bail out five school districts struggling to cope with losses stemming from a $200 million investment involving collateralized debt obligations.

Linda Chatman Thomsen will step down from her position as head of the Securities and Exchange Commission's enforcement division to return to the private sector, the SEC announced yesterday.