WASHINGTON -- Bond underwriting firms appear to be trimming the amount of money they give to conferences sponsored by state and local organizations to make sure they are not running afoul of the MSRB's ban on political contributions, a PSA official said Friday.

"We have heard from a lot of issuers their contributions [from underwriters for the cost of operating conferences] are down," said Laura Fitzpatrick, the Public Securities Association's director of intergovernmental relations. Fitzpatrick was speaking at a meeting of the National Association of Independent Public Finance Advisors.

The Municipal Securities Rulemaking Board's Rule G-37 prohibits a municipal dealer who makes a contribution to state and local elected officials with bond issuance oversight from engaging in business with the officials' government for a two-year period after the contribution is made.

But the rule does not prohibit underwriting firms from helping groups that represent state and local issuers cover the costs of conferences the groups sponsor for their members. Traditionally, firms have sponsored lunches or receptions during the conferences.

Fitzpatrick said the difference between the two types of contributions is clear. Contributions made to conferences do not, for example, enable an individual elected official to buy more television time or produce more political mailings, she said.

"Most of our members have differentiated between when you are giving to a conference" such as those sponsored by the U.S. Conference of Mayors, the National Association of State Treasurers, or the National Governors' Association "and when you are giving directly to a political campaign," she said.

Even so, firms appear to be bending over backward not to run afoul of the MSRB's rule. "I think most of the industry has said yes, they're comfortable with contributing to a conference [but] they may not be contributing as much as they used to because they're just trying to be cautious," Fitzpatrick said.

Fitzpatrick added that the PSA believes the better way to approach problems caused by campaign contributions would be to limit the overall costs of campaigns by enacting comprehensive reform legislation.

Even though "our members are limited in what they can give, the cost of these campaigns are not going to go down a dime," Fitzpatrick said. "It seems kind of crazy that campaign finance reform starts on the shoulders of one very small industry."

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