Both states have dense concentrations of local governments and agencies that rely on bonds to pay expenses between tax seasons and to finance spending projects to be repaid by future taxpayers.
Municipal bond sales support an army of investment bankers, brokers, consultants, lawyers and other professionals eager for fees, some of whom are tempted to cut corners to win deals in the face of stiff national and local competition.
The SEC ran the investigation jointly with the Justice Department, the Internal Revenue Service and bank regulators, with support from attorneys general in Pennsylvania, New Jersey and 18 other states.
According to the SEC, Bank of America, working with independent "bidding agents," on occasion conspired with rival bankers to protect their profit margins and sell bonds at a higher cost to taxpayers than honest competition and a free market would have provided.
Agents also collected fees from Bank of America in exchange for informing on rival bids and lying to clients about costs.
"These bids were rigged," Greenberg said.
Zehner said the bank endangered the tax-exempt status of the bonds and could have exposed taxpayers to millions of dollars in additional costs.
Bank of America spokesman William Halldin said the bank itself reported "evidence of possible wrongdoing" by its municipal bond division three years ago and had been granted an "amnesty" from criminal prosecution by the Justice Department in exchange for coming forward voluntarily.
The bank says it has agreed to stop its employees from rigging bids in the future.
The $137 million payment pot is divided into a series of settlements with agencies that enforce different laws broken by Bank of America.
Besides the $2 million for Montgomery County, from the bank's role in a 2001 bond sale, it is also paying $1.1 million to Downingtown Area School District, for bond issues in 2001 and 1998; $321,000 to Chester County from a 2001 bond issue; and $34,500 to the North Penn School District from a 1999 deal, according to the $9 million settlement between the bank and the Office of the Comptroller of the Currency, BofA's main regulator.
Also, Bank of America will pay $331,000 to New Jersey Transit Corp., stemming from a 2002 bond issue, as part of its $36 million settlement with SEC.
And the bank will pay a total of $4 million to Philadelphia, the city airport and its parking authority, SEPTA, and more than 100 other Bank of America clients across Pennsylvania as part of a $67 million settlement with attorneys general in 20 states, Nils Frederiksen, spokesman for Attorney General (and Gov.-elect) Tom Corbett, said.
Corbett's office is still figuring out who gets how much.
There may be additional payments to Pennsylvania and New Jersey towns from the Internal Revenue Service. The tax agency, which is distributing $25 million of the $137 million settlement, did not return messages seeking comment.
Silver, white, black
Since shortly after World War II, DuPont Co.'s
annual survey of customers' favorite vehicle colors has tracked changing fashions - and, increasingly, the divergent tastes in the faster-growing countries that are displacing the United States as top auto markets.
From 2000 through 2007, silver was the most popular car color in the world's major markets, as if private tastes were converging in a global economy.
Silver still edges black as the most popular color, with each accounting for about a quarter of all auto paint, according to DuPont's 58th Global Automotive Color Popularity Report. (It was green in the 1990s, when the United States was the largest car market. Remember all those Saturns and Reliants?)
But since the financial crisis of 2007, world tastes have diverged:
For the last three years, silver has been replaced by white as the most popular U.S. car color. As private vehicle sales collapsed, white-painted business and government vehicles have had a growing share of American sales.
In Europe and Mexico, by contrast, the top color is now black, favored especially by businesspeople who need to look extra serious these days.
In China, Brazil and South Korea, silver remains tops - as if the boom never ended - though black is rising fast in China. In Japan, India and South Africa, as in the United States, white is now No. 1, though pale purple is gaining in Japan.
PhillyDeals: Making Restitution
Bank of America Corp.'s municipal bond bankers engaged in bid-rigging from 1998 through 2003, the government contends, and has agreed to pay millions in restitution to towns, school districts, counties, public transit agencies, and other local bodies it harmed. Bank of America will:
PAY ITS OLD CLIENTS
$67 million through attorneys general in 20 states, including Pennsylvania and New Jersey
$36 million through the Securities and Exchange Commission
$25 million through the Internal Revenue Service
$9 million through the Treasury Department's Office of the Comptroller of the Currency.
PAYMENTS GO TO
Governments and agencies, including these in the Philadelphia area*:
$2 million to Montgomery County
$1.1 million to the Downingtown Area School District
$331,000 to the New Jersey Transit Corp.
$321,000 to Chester County
$34,500 to the North Penn School District
$28,200 to the Millville School District
*According to Gov.-elect Tom Corbett, BofA may also pay a total of $4 million to Philadelphia, Philadelphia International Airport, the Philadelphia Parking Authority, SEPTA, and more than 100 other bank clients after his office determines losses and interest.
SOURCE: Wire service and government reports
Contact columnist Joseph N. DiStefano at 215-854-5194 or JoeD@phillynews.com.