Minority- and women- owned underwriting firms can expect to co-manage or senior manage more negotiated New York bond deals, following the signing of an executive order yesterday by Gov. David Paterson designed to "level the playing field." He also came out in favor of changes to regulations that would make it easier for foreign reinsurers to do business in the state.

"What the state is trying to do is be fair to all of the firms," Paterson said, referring to underwriters. He said that of $22 billion of bonds sold by the state and state authorities since 2004, only 4% were senior managed or co-senior managed by minority- or women-owned firms.

"Often there was a perception that this was real important business so we're going to save it for the four or five firms that always conduct this kind of business - remember they were small firms themselves once and right now the Federal Reserve just had to bail out Bear Stearns," Paterson said. The current practices "thwart and inhibit" participation by minority- and women- owned firms, he added.

The executive order creates a task force that will establish new guidelines for the procurement process of underwriters and will apply to state-supported debt issued by the Dormitory Authority of the State of New York, the New York State Thruway Authority, the New York State Housing Finance Agency, the Empire State Development Corp. and the New York State Environmental Facilities Corp., pending approval by their respective boards.

The task force will be composed of the heads of those authorities and three additional gubernatorial appointees. About 75% of state-supported debt is sold through negotiation. Each authority has to provide the task force with its current practices in hiring minority- and women-owned firms as underwriters next month. The task force will develop its new guidelines by Sept. 1 and the authorities' boards must consider implementing them by Oct. 15.

One change the task force will consider is the creation of opportunities for minority- and women-owned firms to partner with large investment banks as co-senior managers so that they can increase their ability to become sole senior managers on future deals. The task force will also look at ways to improve the request for proposals process and to identify and eliminate barriers to entry for minority- and women-owned firms.

"This is quite encouraging," said Suzanne Shank, president of Siebert Brandford Shank & Co. LLC, a minority-owned firm based in New York. "You will hear from us and other minority-owned firms that we have been senior managing deals for state issuers across the country."

The firm has not, however, senior managed deals for New York, she said. As an example of how increasing the pool of underwriters would benefit the state, Shank pointed out that while large investment banks have been laying people off, hers was talking to potential new hires.

"Right now the minority-owned firms are probably among the more stable ones on the Street," she said.

Paterson yesterday also came out in favor of changes to state rules about reinsurance that would benefit out of state and foreign reinsurance companies. Currently, any of those firms that are not authorized or accredited to operate in the state must post collateral equal to 100% of their share of policyholder claims, regardless of their credit rating.

New York Insurance Superintendent Eric Dinallo proposed changing those regulations in October so that well-capitalized, highly rated reinsurance companies that were not authorized or accredited to do business in New York would be treated the same as authorized companies and would not have to post collateral.

"It was a form of discrimination," Dinallo said of the collateral posting requirement. He said that removing the collateral requirement would remove a barrier to reinsurance companies doing business in the state.

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