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Bond Accountability Commission 2 Recommendations Page 70

The value of additional enhancement through bond insurance is questionable, particularly if municipal and corporate ratings and associated default risks are disclosed appropriately to investors

CMSD’s utilization of an aggressive investor education program could assist in educating investors about CMSD’s stronger credit strength in relation to the higher default risk, discussed below, of corporate tripleA or double-A ratings received by bond insurers

Bond insurers have been reluctant to stand fully behind the disclosure information they provide for use in official statements in the same manner the insurers demand that municipal issuers stand behind the issuers’ disclosure information

Bond insurers have resisted due diligence investigations by underwriters and others

Bond insurers are evidencing a more aggressive willingness to sue issuers and other parties with whom the insurers conduct business, which raises the question of whether perceived value otherwise resulting from the insurance, if any, may be offset by the potential risks

In the event of insurer rating downgrades, CMSD would incur costs associated with filing continuing disclosure notices under its continuing disclosure undertakings as contemplated in SEC regulatory actions

BAC2 Recomendations Final 04062010  
BAC2 Recomendations Final 04062010  
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