Series 7: 3.2.4.3 Variable-Rate Demand Obligations

3.2.4.3  Variable-Rate Demand Obligations

In the 1980s, Congress began imposing limits on certain types of bond issues. The Tax Reform Act of 1986, for example, placed a limit on the amount of tax-exempt commercial paper that could be issued by municipalities. Issuers who rolled over their commercial paper were deemed to have issued new debt. Once their debt limits were reached, any new issue would come without tax-exempt status. This effectively eliminated any additional use of that source of