WASHINGTON — More than 600 bankers from every state in the nation are urging the Securities and Exchange Commission not to require banks or bank employees who provide traditional bank services to local municipalities to register with it as municipal advisers.
The bankers are warning that SEC registration would raise compliance costs, create redundant regulation for products and services already supervised by banking regulators, and hurt local governments as they are struggling to deal with revenue losses.
“While we are all deeply involved in the life and activities of our communities, the unavoidable effects of the proposal would interfere with our ability to offer the services that we are accustomed to providing and upon which our municipalities rely,” according to 614 members of the American Bankers Association who wrote in a letter sent to SEC chairman Mary Schapiro on Wednesday.
The letter addressed the SEC’s proposed rules for a permanent registration system for muni advisers, who became subject to federal oversight and regulation under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
“As proposed, the rule would label as 'municipal advisors’ banks and many bank employees providing essential and traditional bank services to their local municipalities, including day-to-day deposit, cash management, custody, trustee and lending services — a result we do not believe furthers any legitimate policy goal and, as a recent letter from House Financial Services Committee chairman Spencer Bachus explained, is not what Congress intended,” the bankers told the SEC.
Bachus, a Republican from Alabama, complained about the SEC’s proposed rules in a letter to Schapiro in March.
The SEC is expected to issue final registration rules for municipal advisers later this year and they could differ from the proposed rules. Meanwhile, bankers and hundreds of other market participants have been registering as muni advisers with the SEC under a temporary registration system that currently is in place. Many of them also have been registering with the Municipal Securities Rulemaking Board.