Regulation of the municipal bond market is being refined and strengthened, and the process is grating on nearly everyone.

Last week, the large firms that voluntarily sought to ban political contributions tried to revise their restrictions, and the Securities and Exchange Commission didn't like the first draft. Then the Public Securities Association looked at the SEC's proposed rule to require firms to disclose markups and markdowns on riskless bond sales, and it saw serious problems. After that, the Government Finance Officers Association criticized the Municipal Securities Rulemaking Board and said it shouldn't be so secretive.

Obviously, there's work to be done before the municipal market is reformed and work to be done to make sure the reform is both needed and effective.

There's no question that it makes sense to have only one set of rules to ban contributions from bond firms to the government officials who are responsible for awarding bond issues to underwriters. To have the large-firm voluntary ban in addition to the MSRB's Rule G-37 is pointless and confusing. However, the firms behind the voluntary ban went too far in their revision work and tried to interpret Rule G-37. The SEC and MSRB see themselves as the interpreters, and that is their proper role.

The period for comment on the SEC's proposal for disclosure of markups and markdowns was extended to July 15 from June, and the extension is welcome. At this stage, neither the case for requiring such disclosure nor the case against the SECs proposed rule has been stated convincingly enough.

The GFOA-MSRB confrontation is an episode in a story that will go on and on. The government officials want less secretiveness, and David Clapp, MSRB chairman, said he would seek a meeting with the GFOA to talk about it. MSRB agendas, now confidential, should be published openly, and that's reasonable.

Many of the important specifics of reform are being shaped this summer.

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