WASHINGTON - Market participants are urging Treasury Department and Federal Reserve officials to create a post for a municipal market expert or "czar" who would provide knowledge about the market and its needs to the administration's policymakers, and some of those officials appear to be open to the idea.

The idea was discussed yesterday at a meeting here of the Government Finance Officers Association's debt management committee.

Speaking on a panel, Matt Fabian, managing director at Municipal Market Advisors, said he had met with federal officials and that they are receptive to the idea of creating such a position. But neither Treasury nor Fed spokespersons could provide any comment.

Kenneth Gibbs, executive managing director and chief executive officer of Depfa First Albany Securities LLC, who also spoke on the panel, said market participants' number-one priority should be to get the Obama administration to appoint a "muni czar" to advise it on marketwide issues.

"There is not enough institutionalized understanding in the government about what the market is about," said Gibbs. "We are an orphan market."

He emphasized that the person appointed would have to have a great deal of market expertise and that the post should serve as the central place within the federal government where market participants can bring their needs and concerns.

The recent market turmoil has shown the need for such a post because the muni bond market has been left out of the loop, they said.

Although Congress and federal officials have created several economic recovery programs in response to the financial crisis, state and local muni-bond issuers have been left out of those programs.

Former Treasury Secretary Henry Paulson repeatedly said that state and local governmental debt was "not the focus of" the department's $700 billion Troubled Assets Relief Program.

House Financial Services Committee chairman Barney Frank, D-Mass., has spoken out about the need for muni relief from the federal government, and recently succeeded in getting House members to approve legislation that would clarify that the Treasury could use some of the remaining $350 billion of TARP funds to purchase municipal bonds or provide credit enhancement to munis under a Federal Reserve program.

However, the bill has proven to be largely symbolic because the Senate has no plans to consider it.

Gibbs said while Frank's efforts have been appreciated, the need remains for a dedicated executive official.

"Barney Frank has done a phenomenal job trying to publicize the issue of our market and carry the torch for our market, but a level of responsibility needs to reside in the executive branch," he said.

Furthermore, muni market groups like GFOA should expect to play a more aggressive role in dealing with the government, especially if, as expected, comprehensive regulatory reform of the financial markets is considered, panelists said.

"The federal government is going to regulate, that is a given," said Marlin Mosby managing director of Public Financial Management Inc., who spoke to the committee. "There's going to be a movement to re-do a lot of [previously repealed regulations] ... All parts of this industry will come under scrutiny."

Fabian noted that since the muni market has been structured largely to avoid a lot of attention and controversy, few lawmakers or regulators have significant knowledge about it and groups like GFOA are needed to educate them.

"We have built it to be outside of the loop," he said. "They're interested, they want to help, but they don't know everything."

When lawmakers look to new financial regulations, GFOA and other market groups should be ready to provide expertise on the needs of the muni market and on what regulations could be helpful or harmful, Fabian added.

"It's incredibly important that you [GFOA] be in there and be at the table," said Gibbs.

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Corrected January 30, 2009 at 10:40AM: An earlier version of the story incorrectly reported that Fabian said he had met with Federal Reserve officials. He did not say Federal Reserve officials, only federal officials.<@SM>