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held the documents so executed in escrow pending the final
closing.
Changes in the Program
Because of a pending change in the tax law setting forth
restrictive new arbitrage rebate rules on bonds issued after
December 31, 1985, there was considerable pressure for local
governments to issue multifamily housing bonds on or before
December 31, 1985. As the anticipated December 31, 1985, closing
date approached, principals of DLJ informed Mr. McCown that the
firm was financially unable to underwrite the large number of
tax-exempt bonds that were scheduled for closing on December 31,
1985. Mr. McCown scrambled to find another underwriter. (Drexel
had lessened its involvement in underwriting these types of
securities by this time and was not a viable alternative.)
Mr. McCown was on good terms with Arthur Abba Goldberg, vice
president of the investment firm of Matthews & Wright, Inc., a
Wall Street underwriter. Mr. Goldberg told Mr. McCown that his
firm would underwrite the Bond transactions. Mr. McCown then
informed Mr. Newman that the Matthews & Wright firm would do the
underwriting. Mr. Newman had dealt with Matthews & Wright in the
past and agreed to the substitution of underwriters.
Prior to being sold to the public, the Bonds needed to be
rated by a recognized rating agency, such as Standard & Poor's
Corp. Because the rating agencies needed a period of time to
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