Treasury's expert on tax-exempts to leave for Mudge Rose.

WASHINGTON -- Mitchell H. Rapaport, the Treasury's tax-exempt bond expert, is leaving the department in December to join the law firm of Mudge Rose Guthrie Alexander & Ferdon, several market participants said Friday.

Rapaport, the Treasury's attorney-adviser on tax-exempt bonds, refused to comment on the possible move.

But several bond lawyers said that they expect him to become a partner in Mudge Rose's Washington office after the Treasury and the Internal Revenue Service issue proposed private-activity bond rules.

Rapaport's decision to move to Mudge Rose comes as Richard Nicholls, the head of the firm's tax department in New York City, is preparing to work part-time for the firm beginning next year so that he can pursue other interests. Nicholls has been with Mudge Rose for about 30 years.

Rapapor, who has been at the Treasury since July 1992, was an associate in Mudge Rose's tax department in New York from April 1987 to May 1991.

He left Mudge Rose to join Perkins Coie in Seattle, but was with that firm for only about a year before taking the Treasury post. He was with the IRS' office of chief counsel in Washington for about four and a half years before joining Mudge Rose in 1987.

At the Treasury, Rapaport has played a key role in overhauling the arbitrage rules, and in writing other rules such as those dealing with sewage facilities, reissuances, and private-activity bonds.

Bond market participants credit him with helping to ensure that the Treasury and the IRS issue guidance quickly when issues arise that could potentially disrupt the municipal market.

The department and agency, for example, announced in late July that certain provisions of their final original-issue discount rules would not apply to short-term tax-exempt notes because of an unintended adverse provision in the rules. The announcement came one day after bond lawyers for California uncovered the problem and warned that it could wreak havoc with notes that the state was about to issue.

Rapaport also played a central role in helping to develop and track legislative and policy issues for the Treasury. Bond lawyers said Friday they will be sorry to see Rapaport leave.

"It's a blow to the industry," said William Loafman, a lawyer with Whitman Breed Abbott & Morgan in New York who chairs the American Bar Association's tax-exempt financing committee. "He's a brilliant lawyer. He knew how to listen and could tell the difference between when there was a problem for the industry and when someone was just honking their horn to get something for a client."

Amy Dunbar, the director of governmental affairs for the National Association of Bond Lawyers, said, "Mitch did a wonderful job of making the Treasury Department responsive to the needs of issuers and practitioners with guidance, like on the note issues."

"I think Mitch did a terrific job," agreed Charles Henck, a lawyer with Ballard Spahr Andrews & Ingersoll in Washington. "He showed the willingness to work with the private bar and the good humor necessary for that job."

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