State treasurers accomplished a lot at their annual convention in New Orleans last week.
As our reporter Patrick Fitzgibbons wrote, the National Association of State Treasurers approved several important resolutions designed to improve disclosure and campaign finance practice and raise ethical standards. It marked the first time that the nation's state treasurers spoke with one voice about their relationship with the municipal bond community.
Robert Holden, treasurer of Missouri, led a committee that examined the relationship between state treasurers and bond dealers, and his group came up with good resolutions. These included a requirement that financial professionals make full disclosure of relations between firms, a rule that would bring fee-splitting arrangements to light and, practically speaking, end virtually all of them.
Another resolution would require municipal bond underwriters to disclose the names of lawyers, lobbyists, and public relations professionals hired to promote the selection of particular bond firms. We like that resolution because it's good to know how the world really works. Investors and taxpayers, too, can take action more wisely if they know more.
If municipal bond firms don't comply with the guidelines the treasurers approved last week, the dealers can be dropped from underwriting syndicates and disqualified from future financings. In addition, Nancy Mayer, treasurer of Rhode Island, recommended that each treasurer go back to her or his state legislature and get it to enact laws spelling out penalties for bond firms that fail to comply. More and more disclosure seems certain in the municipal bond world of the future.
The treasurers also approved a resolution on campaign finance reform, broadening the amount of information contributors must disclose. Approval was unanimous, and the treasurers are to be praised for their action. The resolution requires treasurers to disclose not only names and addresses but also occupations and employers of any contributor giving $100 of more, and the rule will make it much easier to find out what's really going on.
The treasurers also called on Congress to enact major campaign reform for all federal, state, and local officials, and that's a good idea, too, even if few people in Washington are serious about doing anything. Still, the resolution is another small push, and sooner or later campaign finance reform will be accomplished.
All told, their resolve in New Orleans last week is noteworthy.
