More Manipulation and Government intervention
News is … (Fox Business)
Democrats Look to Extend Federal Support to Muni-Bond Market
The House Financial Services Committee is scheduled to consider a series of bills that would provide massive government backing and intervention to the municipal bond market. Draft legislation is expected to be introduced as early as this week. A full committee hearing on municipal bonds is tentatively scheduled for Thursday, May 21, according to an internal staff schedule.
This latest intervention would:
- Create a liquidity facility through the Federal Reserve to purchase municipal bonds, much like what the Federal Reserve does with mortgage-backed and federal government bonds.
- Form a temporary federal government program to reinsure municipal bond insurers. Almost all municipalities buy bond insurance because it boosts their credit ratings. The cost of the insurance is usually lower than the higher interest payments that come with a lower credit rating. If the insurer runs into financial trouble, then the credit ratings on the municipal bonds drop because there is doubt about the insurance. Government backing would eliminate that concern.
- Provide additional regulation for financial advisors to municipalities. Many, including former Securities and Exchange Commission Chairman Arthur Levitt, have been calling for stronger oversight of the municipal bond market in the wake of pay-to-play bond scandals, in which banks and advisers have made gifts or political contributions, and received financing jobs along with the fees for those jobs.
One day … after guaranteeing everything … they will find out, that it was formerly known as communism … if not “banana republic” (some people get rich on the back of the rest)
Tags: bond insurers, financials, manipulation
