WASHINGTON--Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, said today that he will work with another House committee chairman to draft legislation that would create a federal agency that would guarantee municipal bonds.
In comments after a wide-ranging news conference, Rep. Frank seemed to acknowledge that such an agency could take away one of the most profitable revenue streams from state-regulated monoline bond insurers.
Impacted by losses related to subprime mortgages, many bond insurers have struggled to maintain the financial strength rating necessary to back municipal bonds.
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