WASHINGTON -- The House securities subcommittee is tentatively scheduled to begin hearings Sept. 9 on whether tougher federal standards for the municipal market are needed, subcommittee and regulatory sources said yesterday.
But aides to the House Energy and Commerce Committee's telecommunications and finance subcommittee stressed yesterday that the date could change.
Top officials of the Securities and Exchange Commission, National Association of Securities Dealers, and Municipal Securities Rulemaking Board are expected to testify at the session.
The regulatory officials are scheduled to outline the results of studies that the agencies conducted over the last three months into whether new rules are needed to curb political contributions in the tax-exempt area, improve secondary market disclosure, give regulators more direct authority over issuers, and tighten oversight in other areas.
The studies were requested this spring by Rep. Edward Markey, D-Mass., chairman of the telecommunications and finance panel, which has jurisdiction over securities legislation, and Rep. John Dingell, D-Mich., who chairs the full committee.
The request came in a May 26 letter in which the two legislators cited "current scandals involving alleged illegal payoffs, influence peddling, conflicts of interest and questionable sales practices" in the municipal markets. They said they were particularly interested in the facts surrounding the recent New Jersey Turnpike refunding scandal.
Agency sources say they tentatively plan to send their reports to Dingell and Markey on Sept. 3.
Markey is expected to announce additional hearings shortly that would feature representatives of municipal market participants such as the Government Finance Officers Association, National Association of State Treasurers, Public Securities Association, National Federation of Municipal Analysts, investor groups, and others.
The subcommittee chairman's plan to conduct a hearing only two days after Congress returns from its four-week August recess signals that the panel wants to hit the ground running this fall in determining whether new standards are needed to protect investors in municipal securities.
Other sources said the securities panel may have scheduled the hearing quickly to prevent the House Banking Commerce, which also claims jurisdiction over the issue, from trying to upstage the energy panel by holding hearings first.
A turf battle developed between the panels when the two top members of the banking committee introduced legislation on June 18 that would require underwriters, bond counsel, and dealers to disclose all political contributions.
The bill, introduced by Rep. Henry Gonzalez, D-Tex., chairman of the Banking Committee, and Rep. Jim Leach, R-Iowa, the top GOP member of the panel, also would repeal the so-called Tower amendment to the Securities Acts Amendments of 1975 that restricts the ability of federal agencies to regulate issuers. The Tower amendment is also expected to be carefully scrutinized at Markey's upcoming hearings.
However, Dingell said in a later to House Speaker Thomas Foley in early August that he will refuse to act on the Gonzalez bill on jurisdictional grounds.
Regulators already are attempting to address some of the issues troubling Dingell and Markey. The MSRB announced on Aug. 4 that it will propose a package of rules late this month designed to control political contributions made by dealers to issuers. Christopher Taylor, executive director of the MSRB, said this week that the panel will unveil the actual language of its proposed rule on Aug. 30.
The board also announced on Aug. 4 that it will propose a rule following its next quarterly board meeting in November designed to shore up secondary market disclosure. The board has scheduled a special meeting on Sept. 29-30 to begin drafting its ongoing disclosure rule.
Meanwhile, evidence is mounting that Martha Cochran, staff director of the Senate securities subcommittee, is among the top contenders for the remaining commissioner's slot on the five-member SEC.
Cochran is reportedly turning over her duties as staff director to Courtney Ward, who currently works for Rep. Charles E. Schumer, D-N.Y. The move is designed to free up Cochran for the SEC slot or a top post at the Treasury Department.
