Congress to help U.S. cities, muni bonds-Rep Frank

al Reuters ^ | 1/19/2009

[markomalley]

The U.S. Congress is likely to help cities' struggling economies not only through the stimulus bill it is expected to pass soon but through measures to boost the municipal bond market, Rep. Barney Frank told a mayors' meeting Sunday.

Frank has put high on his agenda the creation of a bond insurer that the federal government would operate, and which would charge premiums based on the risk of bonds' defaults, he told Reuters. Most bonds do not default and, therefore, do not need insurance but "the market may still want it," said Frank, who heads the House Financial Services Committee.

Lower-rated municipal bond issues frequently used insurance to boost their credit ratings, which drove down the interest payments they had to pay to attract buyers. Over a year ago, credit rating agencies began downgrading the insurers and bonds were left trading on their underlying ratings.

Since then bond issuers have struggled to bring new debt to market and many have to pay higher interest rates. That has proven difficult during the year-long recession when municipalities have seen their tax revenues drop and demand for their social services spike.

The National League of Cities and other groups have proposed creating a collective insurance group with seed money from the federal government that would be operated by cities and states. Frank, though, told Reuters he envisioned a program administered by the federal government to back full faith and credit general obligation bonds.

[markomalley]

Great...not only $13T in Federal debt, but now $??T in state and municipal debt. Smooth move, Barney...

[Seruzawa]

Just like the mortgage market, Federal backing will encourage these irresponsible cities to engage in even more irresponsible deficit spending through bonds.

It’s obvious that the destruction of the entire US economic system is the Rat’s goal.

[biff]

Do I hear Bwaney warming up to sing “California Here I Come”?

Note to Arnold: Don’t bend over in the shower with Barney around.

[oldironsides]

The cities had better not be sanctuary cities. Breaking the law and then putting hand out to all Americans? Email your representatives. Make sure no bailout money goes to the sanctuary gangs. I believe there are 80 of them.

[citizen]

You think Bwaney, Nancy or Hussein is going to listen to you? Or to the few sympthathetic actual Conservative Reps and Senators we have left?

I now really fear that the socialist train is careening downhill with an unstoppable momentum. The “sheeple” now accept any marxist proposition they are told must be done to save the economy. In fact, they have already docilely accepted trillions in Monopoly money spending and what is their reaction? Only that they are all atwitter about the ascention of The One to His throne.