Muni Think

The House Financial Services Committee Thursday will hold hearings on four key areas of the municipal bond market. Two of the proposals are targeted to restoring municipal government access to reasonably priced capital: liquidity and bond insurance. A third is an effort to increase government oversight of financial advisers. The fourth, however, has a different tone. The proposed legislation is titled the "Municipal Bond Fairness Act" and seems designed to push rating agencies to upgrade municipal bond ratings.

We are replying belatedly to Michael Decker's commentary calling for greater regulation of the municipal bond market, "It's Time to Close the Financial Adviser Loophole," on April 6.

Refining SEC rules to build on the lessons of last fall's experience and pursuing ICI's suggestions would be well worthwhile. A "death sentence" is fundamentally a bad idea.

Congress is now hard at work on what some believe will be a fundamental restructuring of the framework for financial market regulation. New Securities and Exchange Commission chairman Mary Schapiro, former SEC chairs Arthur Levitt and Richard Breeden, the leaders of the Municipal Securities Rulemaking Board , FINRA, leading experts in securities law, and various interest groups have all testified recently as to changes they believe are needed, including in some instances greater regulation of the municipal bond market.

The commentary article [published April 6] by Michael Decker, co-chief executive officer of the Regional Bond Dealers Association, was blatantly opportunistic, misleading, and self-serving.

To the Editor:

The Jan. 7 article by Michelle Kaske alleges that "questions continue" over the billing and financial practices at the University of Medicine and Dentistry of New Jersey. She refers to an October article in which the Newark Star-Ledger reported that UMDNJ "continued to overbill even during a two-year period when there was a federal monitor observing the school."

While the proposal from the Government Finance Officers Association to raise the small-issue bank-qualified limit to $30 million will be helpful in increasing the demand for smaller municipal credits, there are two major holes.

With recent financial guarantor downgrades generating headlines and destabilizing the municipal bond market, now is a propitious moment to remind fixed-income investors about the power of two-name credit support, and in particular, the improbability of joint default.

To stimulate investment in infrastructure and to boost domestic employment, Congress should permit pension fund purchasers of municipal bonds to reassign only the tax-benefit - the exemption feature - of those bonds to U.S. taxpayers seeking tax deductions.