Judge Rules Cities’ Muni Bond Rate-Fixing Lawsuit Against Big Banks Can Proceed



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STATE AND LOCAL ROUNDUP | One Republican governor says he voted for Joe Biden … Federal judge strikes down “public charge” rule … Oil clean up on Maryland and Delaware beaches.

A lawsuit Philadelphia and Baltimore filed against eight major banks alleging they colluded to inflate interest rates on a certain type of municipal bond can proceed, a federal judge has ruled. The banks—including affiliates of Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase & Co, Morgan Stanley and Wells Fargo & Co—were trying to get the suit dismissed. But U.S. District Judge Jesse Furman in Manhattan on Monday denied their attempt, helping pave the way for the case to head to trial. The cities’ antitrust claims involve what are known as “variable-rate demand obligations,” or VRDOs, which have interest rates that typically reset weekly. The cities allege that the banks shared information with one another that enabled them to keep rates on VRDO’s artificially high and that they charged hundreds of millions of dollars in fees for “effectively doing nothing.” The VRDO market has become smaller in recent years, but topped $400 billion in 2009, and Philadelphia and Baltimore issued $1.67 billion and $261 million of the bonds respectively. A Minnesota-based municipal advisor has filed similar state-level legal claims that center on VRDOs rates. [Reuters, The Bond Buyer, Bloomberg Law]

REPUBLICAN GOVERNORS | Two Republican governors in New England who have been critical of President Trump took different approaches in the voting booth. Massachusetts Gov. Charlie Baker on Tuesday said he “blanked” his choice between Trump and Democratic challenger Joe Biden. But Vermont Gov. Phil Scott said he voted for Biden, making him the only Republican governor to publicly back the Democratic candidate. Previously, Maryland Gov. Larry Hogan told reporters he wrote in the name of former President Ronald Reagan instead of voting for either choice this year. [Boston.com; Seven Days]

PUBLIC CHARGE | A federal judge on Monday ordered the Trump administration to vacate its rule that would allow immigration officials to deny a green card to immigrants who’ve used public assistance programs like food stamps and Medicaid. The so-called “public charge” rule adopted by the Department of Homeland Security is “arbitrary and capricious,” and contains “numerous unexplained flaws,” U.S. District Court Judge Gary Feinerman ruled. The administration is expected to appeal. [The New York Times]

IOWA HOSPITALS | Iowa hospitals say the Covid surge in their state is threatening to overwhelm hospital beds. "What we're entering is the danger zone," Suresh Gunasekaran, chief executive officer of University of Iowa Hospitals, said on Monday. Gunasekaran and other doctors said people in the state need to start wearing masks, as well as taking other precautions to slow the spread of the respiratory illness. He urged them to start planning for different holiday gatherings. When asked about the steady rise in hospitalization, Gov. Kim Reynolds last week expressed confidence in the medical system, saying the percentage of Covid patients in hospitals remains low. She also expressed confidence in “new therapeutics such as Remdesivir” that have helped treat the illness.  [Des Moines Register; The Gazette]

OIL CLEANUP | Crews are cleaning up tar balls and oily patches on beaches in Maryland and Delaware. Officials say they aren’t sure about the origin of the oil, although they’ve collected more than 75 tons of debris. [WTOP]

Bill Lucia is a senior reporter with Route Fifty and Laura Maggi is the managing editor.

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