A New York State task force met yesterday to consider ideas brought up at a hearing earlier this month to increase participation by minority and women-owned firms in underwriting debt.
The Minority and Women-owned Business Enterprise task force, which Gov. David Paterson created by executive order in June, will release preliminary recommendations around Oct. 20 and will make final recommendations before Nov. 1.
The MWBE task force discussed possible changes to the request for proposals process, policies used to designate underwriters, measuring performance, and the structure of syndicates. These issues had been canvassed at a Sept. 18 hearing at which 21 large and small firms appeared.
Paul Williams Jr., who is both the head of the task force and executive director of the Dormitory Authority of the State of New York, said one of the main considerations is whether they can create a template for the RFP process that can utilized by different issuing authorities "so that everybody knows that we're asking similar questions."
Held up as an example of best practices was a request for qualifications issued this year by Massachusetts that aimed to achieve 5% MWBE participation on each negotiated underwriting, and expects each book-running senior manager to propose a syndicate that includes at least one MWBE as co-manager. The RFQ also considers a firm's exposure to the subprime mortgage market and potential write downs.
Also under consideration was using experience outside of New York state as a factor in selecting underwriters rather than just experience in the state.
"We clearly are looking at moving towards looking at a firm's overall experience and not putting too much of an emphasis on what their experience might be with any particular issuer in New York state but looking nationally in regards to similar types of issues or similar types of issuers," Williams said. "If you've done housing deals in Illinois and Texas and California but you haven't had an opportunity to do that in New York, we shouldn't hold that against you. The important factor is have you had experience doing housing deals."
Carl Andrews, Paterson's deputy secretary for intergovernmental affairs and a task force member, echoed that sentiment.
"We're coming to a general consensus that there needs to be an adequate level playing field for MWBE firms to compete, some of the artificial barriers that have been in existence need to be eliminated," Andrews, said citing rules at the New York State Thruway Authority had required a firm to have had senior manager experience in the state in order to be eligible to senior manage a Thruway deal.
As the continuing shakeup on Wall Street has caused a lot of movement among bankers at firms, issuers could place greater emphasis on the team working that would be doing the work.
"There's been an awful lot of transitioning in the industry," Williams said. "Even larger firms have either moved away from the business or had important members of their professional staff leave to go to other firms for other opportunities. So we think some of the emphasis should be on who's going to really work on our account and what is their experience-not necessarily rely on the experience of the firm."
The task force includes executive directors from DASNY, the Thruway Authority, the Empire State Development Corp., the New York State Housing Finance Agency, and three gubernatorial appointees.
When the task force finishes its recommendations for underwriting guidelines, it will move on to creating recommendations for financial advisers, bond counsel firms, and accounting firms. The task force expects to complete its work by the end of the second quarter of next year.
