As the race to succeed Boston Mayor Raymond Flynn heats up, one potential candidate has said that if elected she would push for changes in the way the city chooses bond underwriters.

City Councilor Rosaria Salerno. one of about 10 potential candidates eyeing Flynn's old post, said in a press release she would recommend that investment houses bid competitively for the right to underwrite city bonds. Further, Salerno would limit to $100 the amount top executives at investment firms could donate to campaigns.

Focusing on alleged abuses in the municipal bond business, Salerno called "absolutely unethical" a private, fee-splitting relationship between Merrill Lynch & Co. and Lazard Freres & Co. The questions surrounding the relationship between the two firms involve fees generated from interest rate swaps in a series of Boston deals.

Salerno was unavailable for an interview yesterday.

But finance officials in the city said Salerno may be off track with her criticism.

City Treasurer Lee Jackson said the councilor's statements are nothing more than campaign year politics.

"She made some general statements about the role of underwriters," Jackson said. "But we have worked very hard at the negotiations for our bond sales and it's hard to believe we could have done better."

Jackson said that since Flynn has been mayor, the city has been upgraded five times -- more than any other major city. "The bottom line is to look at our record," he said.

Boston is currently rated A by all three major rating agencies.

As for the Merrill Lynch and Lazard private agreement on swaps, Boston officials whose swaps were involved in the fee-splitting arrangement said Lazard did disclose its contract with Merrill Lynch. They said they did not see it as a conflict of interest and they do not believe it hurt Boston's bond offerings.

The major issuer mentioned in the Merrill Lynch and Lazard relationship is the Massachusetts Water Resources Authority. As mayor, Salerno would have little influence on the decisions made by the authority.

Jackson did say he would be supportive of campaign finance reform that would include every firm that had any relationship with the city, but he said he would not single out the municipal bond community.

If the city were to move to a strict system of using only competitive bond sales, Jackson said, it would be "very difficult" to sell refunding bonds or do any sort of complicated transaction.

The picture in the mayor's race should get a bit clearer by the end of this week.

Flynn is appearing before the U.S. Senate this week for his confirmation hearings to become the U.S. Ambassador to the Vatican. He is expected to be approved.

If Flynn steps down on or before July 13, the primary will be held in September and the general election will be in November. If Flynn resigns after July 13, there will be a special preliminary election in October and a general election in December.

Among the raft of possible candidates for mayor are state Rep. James T. Brett, D-Boston; City Council President Thomas Menino; Diane Moriarty, a lawyer; city Councilor John Nucci; former police commissioner Francis M. Roach; and former Suffolk County sheriff Robert Rufo.

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