Bloomberg’s Bob Ivry has written an excellent expose of why the French and Belgium bank, Dexia, borrowed more from the Federal Reserve in the financial crisis than any other institution.
Why is Dexia important for muniland? Dexia owned a bond insurer, FSA, that provided insurance and guarantees for a big swath of the municipal market. No funding for Dexia equaled no funding for many municipalities. The markets were teetering on the brink and a few semi-solvent institutions kept them afloat. Dexia was one we hadn’t heard much about until now. More to come on this big story.
Andrew Ackerman of the Wall Street Journal reports on provisions in the new federal tax reform bill that would remove the federal tax exemption for interest earned on state and local bonds. This would represent a sea change for investors and could have systemic effects for issuers.
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Photo of Dexia Tower, Brussels by Marc Wathieu