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A Decade Later: The Municipal Market Post-Financial Crisis Through Today  


Author:  Alex Wallace.; Mary Colby.; Tom Doe.; Richard Cosgrove.


Source: Volume 39, Number 02, Summer 2018 , pp.141-159(19)




Municipal Finance Journal

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Abstract: 

The financial crisis of 2007–2009 inflicted damage to asset values and reshaped the structure, functioning, and regulation of the municipal market. Among other things growing out of the carnage of the crisis were changes to primary market issuance and secondary market trading practices and to bond ownership composition, bond structures, products, processes, and market participants. This article looks back a decade and evaluates the resiliency of the municipal market as it endured some very meaningful changes. In addition, it describes how these and other changes have influenced and transformed the prevailing market environment today and for the future. The panelists discuss tender option bonds, money market reform, the FA Rule, Dodd-Frank, the failure of auction rate securities and what replaced them, growth and maturation of the DigitalPrice (DP) market, the advent of electronic trading in municipal bonds, changes to the market for bond insurance, and the impact of tax reform. Alex Wallace is managing director at US Bank. Mary Colby is vice president and head of municipal research at Charles Schwab Investment Management. Tom Doe is president of Municipal Market Analytics, Inc. Richard Cosgrove is a partner at Chapman & Cutler. This article is based on the authors’ discussions during the panel titled “A Decade Later: The Municipal Market Post-Financial Crisis Through Today” at the 35th Annual Conference of the National Federation of Municipal Analysts held in Coronado, California, May 29–June 1, 2018.

Keywords: Financial crisis of 2007–2009, municipal market regulation, municipal market changes, bond structures, Dodd Frank

Affiliations:  1: US Bank; 2: Charles Schwab Investment Management; 3: Municipal Market Analytics, Inc.; 4: Chapman & Cutler.

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