| July 23
July 23 A law signed by Governor Jerry Brown on
Wednesday strengthens California's disclosure regulations for
direct loan transactions between banks and municipalities.
Sponsored by the State Treasurer, the law requires
alternative forms of financing such as direct loans be included
in existing bank loan transparency regulations. It also speeds
up the deadline to file loan disclosures.
"The key objective was to ensure the reporting of direct
loan transactions between banks and municipal entities that is a
growing segment of the market," said State Treasurer
Spokesperson Tom Dresslar. "There has not been adequate
Non-traditional financing for projects, such as direct loans
from banks, is a rising trend in the U.S. municipal market. But
this type of borrowing allows public officials to obtain new
debt without full disclosure to municipal bondholders, a growing
concern for bondholders and rating agencies that do not know the
full scope of the issuer's indebtedness, the bill's authors
"We believe this puts California in the forefront of an
effort to shed some more light on this corner of the market,"
A new analysis by Standard & Poor's Ratings Services on
Wednesday found the potential for considerable credit risk
exposure among alternative financing products like bank loans
and direct-purchase debt to municipal issuers. The rating agency
highlighted the need for greater disclosure.
(Reporting By Robin Respaut; Editing by Cynthia Osterman)