A number of cities and local governments that issued auction rate securities at low interest rates are now paying higher interest rates because of widespread auction failures that began occurring in early 2008. Some of them have filed arbitration claims against the Wall Street banks that recommended the issuance of auction rate securities, underwrote them, and acted as broker-dealers in administering the auctions. They allege that the banks misled them by failing to disclose their role in supporting the auctions in the absence of a sufficient number of bidders. Many banks that had established a course of entering supporting bids began allowing auctions to fail in early 2008. When auctions failed, the issuing municipality’s interest rate reset at default rates as high as 20 percent, pursuant to the terms of the bond.