Checking in with Prudential's Arthur Spector always puts the news in its proper perspective.

Day chases day, and with it a new crisis, a new scandal, a new report of the enemy having breached the walls. When it all gets to be a little much, I find it good to check in with an optimistic man.

One such optimist is Arthur Spector, a banker who has been in the business since 1975, most of those years with Goldman, Sachs & Co., but since last October head of public finance at Prudential Securities Inc.

Arthur, whom I first met in 1981. has good reason to be upbeat. Under his watch, Prudential has hired 24 new bankers -- team members, not rainmakers -- and seems about to double its market share in negotiated underwriting. He thinks there is more business to be done, and more negotiated business to be done. He also thinks the market will get beyond "the noise in the system" right now about political contributions and associated scandals. Arthur is used to tumultuous times; he graduated from Columbia University in 1968.

Arthur's words offer comfort at a time when some bankers are wondering whether or not there will still be a business next year. It is also heartening to listen to a banker who has not grown cynical with the times, or more bloodthirsty in the face of competition. In all the years I have known Arthur, he has steadfastly refused to talk about anyone in the business in less than courteous terms. That's just the kind of guy Arthur is. He doesn't even talk about his former place of employment, "the other place," as he puts it, except in those same, courteous terms.

Otherworldly

These days, such civility is almost otherworldly.

I stopped in to see Arthur the other day, and to ask him what he thought about the future shape of municipal finance, and whether or not competitive auctions would soon outweigh negotiated transactions.

"I don't think so. The negotiated public method will get the best results, year in and year out, for the issuers. If I'm Apple Computer or IBM, I go out and hire a sales force, right? Negotiated finance gives issuers a chance to hire a sales force. It's very hard for them to tell their stories in the competitive market, without presale. And restructuring and repricing flexibility are also not there if a deal is sold on the competitive basis. What we're seeing are lots of reverse inquiry-based products: Investors tell us what they want, and we tell issuers."

At the same time, on the issuer side, "We're dealing with a new generation of public servants, whose skill level is exceptional."

I asked Arthur whether or not he subscribed to the view prevalent in some quarters that refunding issues have temporarily usurped the place of new money in the market.

Still More Refundings

"There are lots of plans on the drawing boards, but I think new money is driven by the state of local economies, and the state of local economics hasn't been all that good," he said. "I think there will still be more refundings in 1994. It's very difficult for issuers to say, of a refunding, "No, thanks, I'll do it later,' at these rates. But capital finance needs continue to be enormous, and I think the next 10 years will be exciting."

Arthur is understandably effusive when talking about Prudential today: "The local presence of this firm is fantastic -- and public finance is local finance."

So it goes with Arthur Spector. Chatting with him about the industry and current affairs, it struck me that if one read only the headlines, including some of the very justified headlines in this newspaper, one might not reach the conclusion that the industry is having a very good year in 1993. Even so, the industry is on track for a record year, maybe even a $300 billion one. There may be a lot that's wrong with the industry now, but there's also a lot that's right about it.

Arthur had just sent off a book-length proposal for underwriter services to a well-known issuer. He pointed out his department's philosophy, as written in the proposal: To provide the best public finance investment banking services on Wall Street, including superb coverage and a uniquely tailored product.

"I think that's an honorable agenda," Arthur said, emphasis on the honorable. And so it is.

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