WASHINGTON -- There's an irony for the municipal market that is emerging from the Orange County debacle.

When the Republicans took control of the House and Senate in the November elections, some mused that the municipal market might have been far better off had the election been six months earlier.

Had the GOP swept to power then, some issuers and underwriters theorized, Republican leaders would have succeeded by this fall in enacting their proposed Contract With America, which includes a section designed to curb the regulation of securities.

Some said enactment of the contract might have deterred or prevented the Securities and Exchange Commission from imposing its new secondary market disclosure requirements on municipal bonds that were approved on Nov. 10.

The shift in power, at the least, meant there would be no moves to tighten the new rules, which most agree are tough, but less restrictive than they could have been.

But Orange County has snuffed out those visions.

In what seems like a bizarre twist, the Orange County mess has triggered a call -- from a Republican -- for more, not less, regulation.

U.S. Rep. Christopher Cox of California, who represents Orange County, said last week that he plans to introduce legislation next year to subject municipal bond issuers to the same disclosure requirements as corporate issuers, possibly including the ultimate requirement -- registration of municipal bond issues with the SEC. While Cox says he hasn't written his bill yet, he made his intentions quite clear when he said, "I'm going to move to require the same disclosure to a 'T' that is required of corporate issuers."

The SEC, meanwhile, is considering whether it needs to take further action to increase municipal bond disclosure or its regulatory authority over municipal issuers, according to an SEC spokesman.

However, the effect of that comment was tempered a day later when SEC commissioner Richard Roberts said current municipal disclosure rules are adequate to deal with Orange County and that legislation is not needed at this time.

It's too early to tell what will happen next. A lot of market participants, and some members of Congress, raise convincing arguments that the new bond disclosure rules were designed to deal with the kinds of problems that triggered the Orange County disaster and must be given time to work.

Some of them also point out that Cox's call for corporate-style registration is an outright contradiction of the GOP contract and will go nowhere if the Orange County crisis abates.

If the crisis spreads to other issuers, however, Cox may be able to convince his fellow party members to jump on the bandwagon.

Normally, Democrats are the ones who push for increased regulation, while Republicans oppose it.

But this time the GOP could end up leading the charge and the market won't have any skirts to hide behind.

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