Municipalities, student loan companies and closed-end funds have issued about $330 billion of these bonds.
The securities are issued by municipalities, student-loan companies, closed-end funds and tax-exempt institutions like hospitals and museums.
Municipalities, student loan companies, closed-end funds and tax-exempt institutions like hospitals and museums all issued auction-rate securities as either preferred shares or debt instruments to companies and individual investors.
If the fiscal standoff continues, more i.o.u.'s will be sent to vendors, contractors, municipalities and students expecting financial aid checks.
But much of the market returned to normalcy as big investment banks that underwrite the bonds bid in the auctions to support clients like municipalities and student loan companies.
Anxiety is escalating among institutional lenders and major borrowers, as the panic over soaring default rates on subprime mortgages that began last summer continues to spread, freezing up credit for municipalities, hospitals, student loans and even investment funds holding the most conservative bonds.
Photo: Ashkelon Municipality / Students attend the first day of school in the Israeli coastal city of Ashkelon, following the summer war that Israeli children in the south mostly spent in bomb shelters.
Other municipalities that send students to the two schools are Fairfield, North Caldwell and Roseland.
Although some businesses are struggling to get bank financing, municipalities, car buyers, and students again have access to credit.
Existing holders were locked into shares and notes issued by municipalities, tax-exempt institutions, student loan companies and closed-end funds.
