76th Annual  Meeting
The U.S. Conference of Mayors
76th Annual Meeting
June 20-24, 2008
Miami

2008 ADOPTED RESOLUTIONS

MUNICIPAL AUCTION RATES SECURITIES

WHEREAS, local governments are very concerned about the current market turmoil in the municipal bond industry; and

WHEREAS, these difficulties impose additional and unnecessary costs on cities of all sizes which are borne by taxpayers; and

WHEREAS, these problems have nothing to do with the credit worthiness or soundness of local governments but rather have been caused by actions of the private sector; and

WHEREAS, auction rate securities, traditional long-term securities with short-term demand features, are among the biggest problems cities now face in the credit market; and

WHEREAS, in the current market environment auction rate securities – with interest rates reset on a daily, 7-day, 28day, 35-day or longer term basis – do not have enough investors to purchase the securities that holders of these securities want to sell, the end result being a failed auction; and

WHEREAS, there is neither a problem with these securities underlying credit nor with the credit worthiness of the issuers themselves; and

WHEREAS, Bloomberg News reports that government issuers are paying over $1 billion in fees to convert these auction rate securities into other instruments, as a result of the collapse of the auction rate securities market, and these increased costs will delay or possibly eliminate needed infrastructure projects in cities; and

WHEREAS, a variety of legislative and regulatory changes could restore the viability of auction rates securities;

NOW, THEREFORE, BE IT RESOLVED that the U.S. Conference of Mayors seeks to work with House and Senate legislative leaders, the Securities and Exchange Commission , other regulatory agencies as appropriate and the private sector to develop workable solutions to the auction-rate securities problem; and

BE IT FURTHER RESOLVED that the U.S. Conference of Mayors establish a Municipal Bond Task Force to monitor ongoing developments in the bond field, including auction rates instruments, develop solutions, help organize Mayoral action in Washington to bring about needed reforms and work with the Congress, regulatory agencies and other national organizations towards stability in the auction rate market and well as in other related areas.