Moody's reviewing thousands of U.S. muni obligations | Reuters

Moody's reviewing thousands of U.S. muni obligations | Reuters

(Reuters) - Moody's Investors Service is sweeping a magnifying glass over thousands of U.S. municipal sector obligations that are linked to 26 banks currently under review for possible credit rating downgrades, it said on Tuesday.

"The news could cause worry in the $3.7 trillion municipal bond market, where issuers have for the most part been successfully extending or replacing letters of credit and other expiring facilities backing their debt.

A bubble in bank letters of credit developed when the auction-rate securities market collapsed and issuers moved their money into variable-rate bonds, which need the facilities to serve as lines of credit during remarketing.

Many facilities provided during the financial crisis of 2007-08 expired last year, affecting approximately $130 billion of variable-rate bonds and issuers began turning to U.S. banks as concerns grew over financial problems in Europe."

Fred Leeb: Detroit Must Take Advantage of Being the Nation's Poster Child

Fred Leeb: Detroit Must Take Advantage of Being the Nation's Poster Child

Fundamental Structural Changes Needed -- No More Band-Aids
Yes, Detroit must make huge reductions in expense, operate more efficiently, work cooperatively with its neighboring communities, sell off assets and borrow additional amounts wisely, but all of these actions are mainly for the short run and are likely to be inadequate. They will be necessary, however, to buy the additional time needed for new plans to be designed and implemented that will enable fundamental structural change. Detroit's problems are too deep to be resolved by using just the standard turnaround techniques. Detroit needs a huge amount of new investment and at least tens (more likely, hundreds) of thousands of new people and businesses who can pay taxes. They will not be attracted to the city by the wind down of services due to necessary cost cuts in public safety, roads, schools and other fundamental departmental areas. They must have something that is clear, tangible and positive to look forward to; they will be attracted by a long-term plan for success.

Detroit: In the Eye of the Storm

Detroit Must Take Advantage of Being the Poster Child and Utilize All of its Resources
In order to obtain the huge amount of resources necessary for a credible plan to implement fundamental structural changes, Detroit must take full advantage of being the national poster child for major cities that need revitalization and new jobs. National news organizations like the Washington Post, Bloomberg, the Wall Street Journal and the New York Times already are following Detroit's story very carefully. People in Illinois, California, New York and many other states have a spotlight on Detroit because Detroit was hit first and more severely. Leaders of many other big cities know that their problems are very similar to Detroit's and that they are not far behind in the need to fix their own problems. The rest of the U.S. is looking to Detroit for ideas and examples of how to overcome its tremendous financial problems because they know they will eventually need to do the same thing.

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