Muni Think

In the wake of the near-meltdown of the global financial markets, it can be tempting to conclude that the losses faced by municipal issuers and investors in recent years were unavoidable. In a maelstrom, all ships are at risk.

Municipal budgets continue to exhibit severe stress, and public officials are being pressed to come up with solutions that create savings from both traditional and non-traditional sources. The low-hanging fruit has generally been exhausted, and incremental silver-bullet solutions are hard to find.

Andrew Ackerman’s Jan. 13 article “Climate Disclosure Sought” accurately reflects the current state of public debate on disclosure of financial risk to investors in tax-exempt bonds that support new and existing coal-fired electric generation plants. It is a debate fraught with paradox and risk.

Meaningful regulatory reform must ensure that large institutions receive neither explicit nor implicit protection from the federal government. The Regional Bond Dealers Association strongly supports comprehensive financial regulatory reform, especially the legislative efforts to end the taxpayer bailout of financial institutions deemed “too big to fail.”

It is hypocritical for John White to be so disparaging of broker-dealers (“Regulating Muni FAs: A Solution in Search of a Problem,” Dec. 7, 2009) when his firm, PFM Group, is so closely aligned with the very dealers he criticizes.

The media is on fire with pundits and purveyors of gold hawking the yellow stuff at every opportunity.

We continue to hear increasing discussion about the “need” to regulate municipal financial advisers.

The program has enabled hundreds of issuers to come to market on better terms, thus encouraging them to go forward with badly needed facilities, such as new schools, hospitals, environmental projects, and water and sewer projects.

Since the first transaction in April, issuers nationwide have sold more than $47 billion of BABs at net yields significantly below what they could achieve in the traditional tax-exempt market.

At the end of August, New York Comptroller Thomas DiNapoli announced that pension contributions for governments in the state would increase by about 35% in 2011, or some $880 million.