It's not often that the regulated mourn the loss of a regulator.
But that's what bond market participants are doing this week because of the pending departure of John J. Cross 3d from the Internal Revenue Service.
The 37-year-old Cross, who has been counsel to the assistant chief counsel for financial institutions and products for more than three years, plans to leave the IRS at the end of the week and become a partner in the Washington office of Hawkins, Delafield & Wood in January.
Market participants said Hawkins' gain is a loss for the government and the industry.
He's going to be very, very sorely missed by the IRS and the industry," said Robert Buck, a lawyer with Palmer & Dodge in Boston.
"It's a great loss," said Milton Wells, director of the National Association of State Treasurers' office of federal relations.
Why the crocodile tears?
For one thing, Cross is credited with helping to draft and push through the IRS an impressive group of bond regulations that serve both the government's goals and the industry's needs for simplified and more workable guidance.
"He was a producer," said Richard Chirls, a lawyer with Orrick Herrington & Sutcliffe in New York. "He would take on projects and get them done and that will be a great loss."
Cross was particularly lauded for his role in consolidating and simplifying, in just one year, several sets of arbitrage rules, some of which had been outstanding since the 1970s.
"We definitely couldn't have rewritten the arbitrage regulations and finalized them in a year without him He worked harder than anybody on that project," said Mitchell Rapaport, the Treasury's tax-exempt bond attorney-adviser.
"John deserves more credit than he'll ever get for laboring long and hard to bring rationality to the arbitrage and rebate rules," said William Conner, a lawyer with Squire, Sanders & Dempsey in Cleveland.
Amy Dunbar, director of governmental affairs for the National Association of Bond Lawyers, agreed, saying Cross brought "simplicity and clarity of thought" to the rules.
Cross received high praise for being "a good technician" from several lawyers including Perry Israel, with Orrick in San Francisco, and William Loafman, with Whitman, Breed. Abbott & Morgan in New York.
Israel said Cross, in rule-making projects, "was able to take lots of comments from lots of different people and put them together in a way that turned out to be better than any of them or the sum of them."
Dunbar, Rapaport, and others said that Cross was a good negotiator.
Cross was also credited with helping to usher in a new era of cooperation between the IRS and the bond industry. "One of the highlights of the last few years has been the improved relationship between government and the bond community, and John is one of the key reasons for that improvement," said Charles Henck, a lawyer with Ballard Spahr Andrews & Ingersoll in Washington.
Walton, now a lawyer with Jones Hall Hill and White in San Francisco, said Cross "has a reputation in the industry of being someone who will listen and who will make a genuine effort to change the things that need to be changed and who will try to simplify when complexity serves no purpose."
"He was genuinely concerned about having regulations that worked in the real world," said Buck of Palmer & Dodge. "He tried to write regulations that did not penalize legitimate transactions in getting at the abuses."
Representatives of issuer and industry groups said they were appreciative of Cross' efforts to understand their problems.
"I don't think we've ever met a federal official who's gone more out of his way to make sure he understood the practitioner's views and the problems they faced in implementing regulations," said Catherine Spain, director of the Government Finance Officers Association's federal liaison office.
Micah Green, executive vice president of the Public Securities Association, said, "He has an excellent working knowledge, not only of the revenue implications of bonds, but of the positive policy aspects of bonds and the role they play in financing projects."
At the same time, Cross could never be accused of giving away the store.
"He had a healthy skepticism, which I think every regulator needs," said Neil Arkuss, a lawyer at Palmer & Dodge and president of the National Association of Bond Lawyers. "He was not one of those people who thought everyone was out to pull the wool over his eyes, but he was smart enough to recognize when they were."
"He's a man of great intellectual honesty with a fair amount of pragmatic common sense," said C. Willis Ritter, a lawyer with Ritter, Eichner and Norris in Washington who sometimes sparred with Cross over tax issues.
But mostly, market participants said they just plain liked Cross because of his easygoing nature and his sense of humor.
"He's such a pleasant guy to work with," said Walton. "He's very level-headed. He's very straight with you. You always know where he stands. And yet he's flexible, he's willing to change his mind. He isn't turf conscious."
One example of his humor is the self-deprecating phrase he coined in referring to himself at industry meetings as "a tacky government puke."
David Caprera, a lawyer with Kutak Rock in Denver, said that Cross had "a light touch" and could "get up in front of an audience and deliver a message that they may not want to hear but that was well received."
Cross was every reporter's dream. He was very articulate. He could explain the most arcane issue. He was generous with his time. And he made work fun.
Perhaps James Malloy, the IRs' associate chief counsel for financial institutions and products, put it best when, quizzed by a reporter about Cross'replacement, he said not really in jest, "You could never replace John Cross."