TITLE

FHLBs Seek LOC Legality

AUTHOR(S)
Duff, Susanna
PUB. DATE
March 2003
SOURCE
Bond Buyer;3/19/2003, Vol. 343 Issue 31596, p1
SOURCE TYPE
Trade Publication
DOC. TYPE
Article
ABSTRACT
Just as the U.S. Internal Revenue Service (IRS) is about to launch its first round of audits of tax-exempt economic development bonds backed by bank system Federal Home Loan Banks' ( FHLB) standby letters of credit, the bank system is forming a plan to get Congress to make the enhancements legal. The bank system's effort comes as IRS officials said any issuer of non-housing tax-exempt bonds backed by FHLB credit enhancements that did not approach the agency by March 15, 2003 to reach a settlement could expect to hear from the IRS later in the week that their bonds are under audit. Under a settlement structure designed by the IRS, those issuers would be required to pay 30% of the tax owed on the interest of tax-exempt bonds carrying a federal guarantee, instead of the full 100%.
ACCESSION #
9387886

 

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