WASHINGTON -- Call it "government in the dark."
At a time when the public is demanding more "government in the] sunshine," the Municipal Securities Rulemaking Board continues to operate as much as possible in the shadows. In fact, the MSRB gave a clear sign last week that it is trying more than ever to keep its decision-making process out of the public spotlight.
This tendency was revealed when Vicky Stamas, a reporter for The Bond Buyer who covers regulation of the municipal market, discovered that the MSRB has changed its long-standing policy of releasing comments received on proposed rules once the deadline for filing the comments has expired.
Instead, the MSRB will now make available comments received on proposed rules only after it has reviewed the comments. That means, in the case of two important rules now pending before the board on customer protection and price dissemination, that any comments cannot be viewed by the public or members of the municipal industry until the board holds its next regular meetings in another two months -- even though the deadline for filing the comments expired last Thursday.
If the policy stands, it also means that many proposed rules are likely to be adopted by the board before the comments on the proposals ever see the light of day.
To be fair, the board's new policy merely parallels that of other self-regulatory organizations such as the National Association of Securities Dealers, which does not release comments on rule proposals until its board has taken final action.
But the MSRB shouldn't, and there is no reason it has to.
Refusing to make comments filed on proposed rules available to the public in a timely manner does not sound like a bid deal. But it comes at a time when publicity over influence peddling and mediocre disclosure practices has left a jaundiced light focused on the municipal market.
The new policy also comes at a time when some legislators and federal regulators increasingly think the MSRB has not done a very good job regulating dealers because the board often appears to spend more time protecting them than taking the lead in forcefully handling problems facing the industry.
If anything, the MSRB should be moving to be more open in its decision-making process, not less. While the board legally has the right to hold closed meetings, it should consider public meetings, at least during proposed rules talks, so the industry and the public will be aware of the full debate that leads up to a board decision.
The MSRB also should consider holding more informal open meetings in various cities to gather more comments from rank-and-file members of the industry and releasing minutes of its closed meetings to show how decisions were reached.
If the MSRB started operating more in the sunshine and less in the dark, it would be far more in touch with the problems of the industry and far more effective.
