Law and legal issues

U.S. District Judge R. David Proctor today holds a second conference call with attorneys for Jefferson County, Ala., and the bond insurers and trustee who are seeking immediate appointment of a receiver for its troubled sewer system.

WASHINGTON - Could tax-exempt housing bonds help resolve the financial crisis?

The primary market will again be severely diminished this week as several new issues remain in limbo against a backdrop of continued weakness in municipals and intense anxiety in the overall financial markets as a result of last week's government takeover of Washington Mutual and the pending resolution by Congress of the $700 million financial industry rescue plan.

SAN FRANCISCO - The consolidation and reshaping of the U.S. financial industry landscape continued late last week, as JPMorgan Chase & Co. snapped up the assets of defunct Washington Mutual Inc.

Roosevelt & Cross Inc. did not fulfill a commitment to purchase $159.7 million of revenue anticipation notes and bond anticipation notes after it was unable to underwrite them last week, according to Kenneth Vetter, executive director for the issuer that tried to sell the debt, the Erie County, N.Y., Fiscal Stability Authority.

SAN FRANCISCO - Barclays Capital restarted Lehman Brothers Inc.'s municipal bond trading desk and remarketing operations yesterday.

The Municipal Securities Rulemaking Board is restructuring its 15-member board and will have to elect two new securities-dealer representatives in the wake of the upheaval on Wall Street.

BRADENTON, Fla. - An emergency request seeking a receiver for Jefferson County, Ala.'s troubled sewer system should be denied because the bond insurers making the request have "manifestly unclean hands" and such a move would force the county into bankruptcy, Jefferson County attorneys said yesterday in documents filed in U.S. District Court.

WASHINGTON - Congressional leaders and Bush administration officials appeared to move closer to a tentative agreement on the Treasury Department's proposed $700 billion bailout late yesterday. However, some Republicans made it clear they remained opposed to it and it was unclear if supporters would be able to get enough GOP support for the pact to push it through Congress.

The Municipal Securities Rulemaking Board yesterday issued preliminary specifications for submitting electronic municipal bond offering documents to the MSRB's Electronic Municipal Market Access system, as well as real-time subscriptions to primary market information posted on EMMA.

BRADENTON, Fla. - With less than a week until the expiration of forbearance agreements that delay some of Jefferson County, Ala.'s sewer bond debt payments, insurers and the county's bond trustee Tuesday filed an emergency motion for the appointment of a receiver for the sewer system.

WASHINGTON - Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke struck a conciliatory tone yesterday, assuring members of the House Financial Services Committee both that the primary goal of their $700 billion bailout plan is to protect Americans at the "lunch-bucket" level and that the administration will need Congress' help and oversight with the plan.

WASHINGTON - A second nationally recognized municipal securities information repository has warned about the anticompetitive effects of the SEC's proposal to amend its Rule 15c2-12 to designate the MSRB's Electronic Municipal Market Access system as the muni market's central repository for continuing disclosures.

BRADENTON, Fla. - In what is the first case of its kind involving Jefferson County, Ala.'s troubled sewer system, a former county commissioner has agreed to plead guilty to one count of obstructing justice in connection with her involvement in the sewer bond deals.

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.