WASHINGTON — Michael Mundaca, President Obama’s nominee to become the Treasury Department’s assistant secretary of tax policy, told the Senate Finance Committee yesterday that the Build America Bonds program is “too successful to simply allow it to expire.”
Mundaca, the acting assistant secretary for tax policy who was officially tapped for the post in September, told the committee during a hearing that the BAB program has exceeded all expectations and deserves to be extended beyond its current deadline at the end of 2010.
“It’s opened up markets to states and localities to place their bonds beyond where other state and local bonds could be placed,” he said. “We need to seriously consider whether and how to extend it.”
In weighing the extension of the program, issues like its cost to the federal government and the level of interest subsidy provided will need to be considered, he said, while reiterating to lawmakers that “it’s too successful to simply allow it to go away.”
Mundaca was responding to a question from Sen. Ron Wyden, D-Ore., who said he initially had expected BABs would result in $3 billion of issuance over the two-year period of the program.
But Mundaca said that over $47 billion of BABs have been issued since the program was approved as part of the American Recovery and Reinvestment Act.
Mundaca must be recommended for the post by the committee and confirmed by the full Senate.
Peter Coffin, the president of Breckinridge Capital Advisors Inc., said after the hearing that the BAB program has been good for municipalities everywhere and deserves to occupy a permanent spot in the muni market as soon as possible.
“The sooner the program is extended, the sooner more institutional investors will make long-term allocations,” he said. “The federal government has always subsidized municipal finance, it’s just no longer wedded to one form of subsidy, and I think it’s recognized that the two complement each other.”