New York City's report on Elizabeth Holtzman's $450,000 bank loan will propel the municipal bond market toward tougher regulation, and it should. Election campaign funny money has become too dark a blot on the business.

Liz Hoftzman last Tuesday came in second in a three-way primary race to select the Democratic nominee for city comptroller, and she then decided to make public a report of the city Department of Investigation that had looked into a loan from Fleet Bank to the Holtzman U.S. Senate campaign. The report found that Holtzman had shown "gross negligence" when she took out the loan and later approved Fleet Securities as a co-manager of the city bond syndicate.

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