Overview:Bond insurance companies are being monitored by a number of investment firms to make sure they can sustain any loss brought about by collateralized debt obligations with high-risk mortgage-backed securities. Issuers and borrowers should examine bond transactions that are tax-exempt as a precautionary measure in case a downgrade occurs. It is also important in examining agreements entered into by issuers and in case there is a need in changing credit and liquidity support bonds secured by a letter of credit. Non-profit organizations that are classified as bond issuers or conduit borrowers should take note of this issue so that preventive measures may be taken if necessary.
The Knowledge Congress is assembling a panel of experts to discuss the important aspects of this issue. The panelists are scheduled to speak in a two-hour teleconference and webinar.
<strong id="ep-name-of-speaker">Michael Moriarty, Deputy Superintendent for Property and Capital Markets,</strong>
<em id="ep-speaker-firm">New York State Insurance Department </em>
- NY Insurance Department’s Role in Regulating the Bond Insurance Market
- Problems Facing the Bond Insurance Market
- Impact on the Municipal Bond Market
- Adequacy of Existing Regulatory Tools
- Potential Changes to Regulation of Bond Insurers
- The Future of Bond Insurance
<strong id="ep-name-of-speaker">Michael J. Schozer, President,</strong>
<em id="ep-speaker-firm">Assured Guaranty Corp. </em>
- What caused the ABS CDO crisis? How did this happen to bond insurers who are highly regulated
and monitored by both regulators and rating agencies?
- What changes could the regulators make and what impact would they have on bond insurers and
- Can the existing bond insurance market serve the needs of municipal issuers?
- How will the demand for bond insurance change in the future?
- What is the impact of corporate equivalent ratings?
- How are bond insurers adjusting/coping with the current market environment?
<strong id="ep-name-of-speaker">Steven A. Chamberlin, Manager, Tax Exempt Bonds Compliance & Program Management,</strong>
<em id="ep-speaker-firm">Internal Revenue Service (IRS) </em>
- What is a reissuance under the Internal Revenue Code and corresponding Treasury Regulations?
What type of modifications to a debt instrument trigger a reissuance?
- What are the tax consequences of a reissuance? How does this impact tax-exempt bonds?
- What special reissuance standards apply to tax-exempt bonds? What are the differences between
IRS Notices 88-130, 2008-27 and 2008-41?
- What other options are there to voluntarily correct adverse tax consequences resulting from a
- What happens if the Service determines that a reissuance occurred during an examination of
<strong id="ep-name-of-speaker">Margaret Purcell, Executive Director, National Tax Exempt Organization Group,</strong>
<em id="ep-speaker-firm">Ernst & Young LLP </em>
Credit Crisis: What Should an Issuer Do?
- What do the issue documents dictate?
• Trust Indenture,
• Insurance Agreement,
• Swap Agreement,
• Auction Rate Agreement,
• Tax Certificate
- Review all of your investments and your investment policies with a focus on risk to your organization.
Develop a summary of your choices, both during and after the current IRS period of benevolence.
• Summarize the need for a reissuance or refunding under the documents from your closing
transcript, comparing the requirements before and after July 1, 2008.
- Document your private business use, and all other post-issuance requirements.
• Perform the due diligence necessary for re-entry into the tax-exempt marketplace, assuming that
your institution will not be able to complete a transaction prior to July 1, 2008.
- Talk to your financial advisors about choices they perceive are available to you.
• Based on your credit without insurance, rating agency guidance and alternatives available to you
identify structuring choices that are possible for your issue:
» Taxable Refunding
» Fixed Rate Refunding
» Buying your own bonds
» Commercial Paper
» Bank Letter of Credit Arrangement
» Insurance or no insurance
» Other alternatives your financing team can suggest
- Do your homework regarding the potential impact on your financial statements of the choices
offered by your financial advisor, including the FASB and GASB requirements.
• Discuss the financial statement impact of the alternatives so that you know in advance of a
transaction what the accounting treatment differences would be, and determine what potential
Board Action might be required as a result of such impact.
<strong id="ep-name-of-speaker">Valerie Pearsall Roberts, Partner,</strong>
<em id="ep-speaker-firm">Jones Day </em>
- Taxably Refunding the ARS (current refunding using taxable debt)
- Removing the Bond Insurance (financial guarantee)
- Non-reissuance conversions
- Interest rate mode on the bonds is to be modified
• The bonds are generally required to be tendered to the issuer/borrower or agent, and any
modifications of the documents are approved after the bonds are tendered.
- Issuers and Borrowers should be aware of the many results of a reissuance and of a reoffering
even where there is no reissuance of the bonds.
Who Should Attend:
- Bond Insurers
- Bond Counsels
- Nonprofit organization Financial Executives
- Fixed-Income Officers
- Wealth/Capital Market Officers
- Public Finance/Municipal Law Attorneys and Municipal Bond Executives
As CPM Manager, Steve leads the IRS’s voluntary compliance, taxpayer assistance, and compliance analysis and review programs within the Tax Exempt Bonds Division. In this capacity, he directs the resolution of tax violations voluntarily brought forward by governmental issuers, the review of claims for recovery of overpayments of arbitrage rebate, the planning of compliance activities within segments of the tax-exempt bond market, and the review of examination cases. Steve is also responsible for providing technical assistance to the Director and the Field Operations staff, coordinating formal guidance projects with Chief Counsel and Treasury offices, and developing education and compliance initiatives. He joined Tax Exempt Bonds as a Tax Law Specialist through the Presidential Management Fellows Program.
Steve received both a Juris Doctor and Master of Science in public policy and management from the University of Oregon as well as a Bachelor of Arts from the University of Puget Sound. He is currently a member of the Missouri State Bar.
As CPM Manager, Steve leads the IRS’s voluntary compliance, taxpayer assistance, and compliance analysis and review programs within the Tax …
Michael Moriarty is the Deputy Superintendent for Property and Capital Markets with responsibilities including overseeing the licensing, examination and regulation of all property-casualty insurers and related entities, and oversight of the capital markets and risk management activities of insurance companies. Deputy Superintendent Moriarty also oversees the regulation of captive insurance companies in New York.
Deputy Superintendent Moriarty began his career in the Department in 1979 after receiving a Bachelor of Science Degree in accounting from the City University of New York. Since then, he has served in a number of positions, most recently as the Director of the Department’s Capital Markets Bureau. The Capital Markets Bureau has been operational since 2000 and oversees the capital markets and risk management activities of New York-licensed insurers. He has worked on the development of new initiatives to enhance the financial solvency oversight of licensed insurers in New York, including accelerating the trend towards reliance on risk-based analyses/examinations and coordinating the Department’s policy on investments, derivatives and insurance securitization.
Prior to that, Mr. Moriarty served as the Assistant Chief Examiner of the Property Bureau. In that position, he coordinated the financial analysis of the property-casualty industry in New York.
Deputy Superintendent Moriarty participated in task forces and working groups of the National Association of Insurance Commissioners (NAIC). He represented the Department as Chair of the Risk Assessment Working Group, which is charged with developing the national risk-focused approach to financial solvency regulation, and as Chair of the Valuation of Securities Task Force, which establishes policy on the regulation of insurance industry investments.
Deputy Superintendent Moriarty was the 2005 recipient of the NAIC Robert Dineen Award for Outstanding Service and Contribution to the State Regulation of Insurance, the most prestigious honor bestowed by the NAIC. He lives in Middle Village, NY with his wife, Natalie and their son, Danny.
Michael Moriarty is the Deputy Superintendent for Property and Capital Markets with responsibilities including overseeing the licensing, examination and regulation …
Michael Schozer has been President of Assured Guaranty Corp. since December 2003.
Prior to joining Assured Guaranty, Mr. Schozer was Managing Director, Structured Finance and Credit Derivatives at Ambac Assurance Corporation (Ambac). He joined Ambac in 1996 and was responsible for the CDO, credit derivatives, large equipment leasing securitization and structured insurance businesses. Mr. Schozer was also a member of Ambac's senior credit committee.
Prior to joining Ambac, he was a director in the debt capital markets business of Barclays Bank, where he ran the North American Structured Products Group. Previously, he had worked on the interest rate and currency swaps desk. Mr. Schozer began his career in public accounting and worked at both KPMG and Ernst & Young.
Michael Schozer holds a B.S. from the University of Pennsylvania and an M.B.A. from the University of Virginia.
Michael Schozer has been President of Assured Guaranty Corp. since December 2003. Prior to joining Assured Guaranty, Mr. Schozer was …
Margaret is an Executive Director in our Exempt Organization Tax Services Practice based in Jacksonville, Florida. As the national leader for Ernst & Young of the Private Activity Compliance Services practice, Margaret is responsible for reviews of the reports generated by our team of professionals nationwide. She has more than 30 years experience in tax-exempt finance and the health science industries and has additionally provided services to health care organizations, academic medical centers, states, cities, counties, universities, school districts, transportation and utility authorities as well as housing authority issuers of debt.
Education and Affiliations
- Bachelor of Arts, American University
- Member of the National Association of Bond Lawyers
- Member of the Florida Government Finance Association
Margaret is an Executive Director in our Exempt Organization Tax Services Practice based in Jacksonville, Florida. As the national leader …
Valerie's practice covers a wide range of federal income tax questions related to the issuance of tax-exempt debt obligations and related transactions, including acquisition finance, refundings, interest rate swaps, and other financial derivatives. She has represented major state and local issuers, underwriters, borrowers, broker/dealers, and financial advisors in the structuring and issuance of taxable and tax-exempt debt to finance health care, education, extended care facilities, transportation, energy, solid waste, and housing. In addition, Valerie advises on post-issuance transactions, frequently in the context of acquisitions, mergers, bankruptcies, changes of use, and debt or investment restructuring and on secondary market transactions including total return swaps.
In addition, Valerie has served as tax counsel to the Illinois Finance Authority, the New York State Attorney General, the New York State Medical Care Facilities Finance Agency, the New York City Health and Hospitals Corporation, and the New York State Environmental Facilities Corporation and to many underwriters, including Bear, Stearns & Co., Merrill Lynch, UBS Financial Services, Lehman Brothers, JPMorgan Chase & Co., Citigroup Global Markets, Morgan Stanley, and B.C. Ziegler & Company, and to financial advisors such as Ponder & Co.
In 2000, Valerie served as editor-in-chief of the Federal Taxation of Municipal Bonds, published by Aspen Publishing for the National Association of Bond Lawyers (NABL), having served as an editor in 1998 and 1999. She was a member of NABL’s Municipal Derivatives Taskforce (2005-2006) and a member of the Steering Committee for the Bond Attorney’s Workshop (2006 and 2007). She’s also a member of the New York State Tax Exempt Financing Committee and the American Bar Association’s Tax Exempt Financing Committee.
Valerie frequently serves as a panelist for NABL at its annual Tax and Securities Law seminar and its annual bond attorneys workshop on issues such as swaps and other derivatives, “hot topics,” refunding bonds, 501(c)(3) bonds, tax shelter rules affecting tax exempt entities, working capital financings, private activity bonds, allocation and accounting rules, rebate and “esoteric tax topics.” She has also served as a panelist for the Practising Law Institute on tax-exempt financing and co-authored (with Arthur Miller) “Refundings of Tax Exempt Bonds: Problems and Analysis.”
Education: New York University (B.A.); Lyndon College (M.Ed.); The University of Chicago Law School (J.D. 1981); New York University (LL.M. in Taxation 1986)
Valerie's practice covers a wide range of federal income tax questions related to the issuance of tax-exempt debt obligations and …
Mr. Fabian is a Managing Director for Municipal Market Advisors (MMA), an independent research and strategy provider specializing in municipal …
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Internal Revenue Service (IRS)
Municipal Market Advisors (MMA)
About Internal Revenue Service (IRS)
About New York State Insurance Department
About Assured Guaranty Corp.
About Ernst & Young LLP
About Jones Day