Charles Seivers, President/CEO

The Tennessee Municipal League and the Tennessee County Services Associations have a very successful loan program administered by the Tennessee Municipal Bond Fund and the Tennessee County Services Loan Program. Unlike other programs, our program is a straight forward variable rate. We have loaned over $3 billion and saved cities and counties more than $255 million in interest costs alone. We have reduced the cost of issuance approximately 60%. A city or county may refund out of the program at no cost or penalty should they decide to change to another type of loan.

In regard to the recent New York Times article on variable rate loans, "the article speaks for itself." We do not employ these types of swaps or derivatives for financing as mentioned in the article. As the article points out, allowing the financial advisor to also be the underwriter is a problem, and we strongly agree with the author of the article on this point. Beyond that, we do not have any further comment.

We have had a few questions raised about our letters of credit and Bank of America's rating. Bank of America provides the letter of credit on all of our pools. Their rating has dropped a couple of times over the last few months to AA with a negative outlook. They recently received a AA rating with a stable outlook. In light of these ratings, our remarketing rate has not suffered at all. In fact, we have had the lowest monthly average rates in the history of our program. January's daily rate average was 0.45%, February's daily rate average was 0.57% and March's daily rate average was 0.42%. We currently have 22 pools outstanding and we have never had any problems with the letters of credit being renewed. We renew, in most cases, at least one letter of credit every month and there has never been any mention about the letters of credit not renewing.