WASHINGTON -- The

Government Finance Officers

Association has made two

excellent suggestions for improving the operations of the

Municipal Securities Rulemaking Board.

But both proposals should be expanded.

The GFOA's suggestions, made in a letter sent to the

MSRB about 10 days ago, urged the board to consider

opening some of its meetings to the public and changing the

process it uses to select board members.

Aurel M. Arndt, the chairman of the GFOA's

governmental debt and fiscal policy committee, made an excellent

point in

the letter when he said that many issuers are frustrated with

the

MSRB because of its "lack of adequate outreach and

meaningful consultation with public officials on important

issues."

Part of the MSRB's problem is that it has been operating

almost exclusively behind closed doors for its nearly 20-year

existence -- a basic contradiction of the board's attempts in

recent years to improve the municipal bond market's

mediocre disclosure practices.

The GFOA has wisely suggested that at least some of the

MSRB's meetings should be thrown open, especially those

where the board is discussing issues and developments that

may lead to the enactment of new rules and regulations.

The GFOA also made good points when it suggested

that minutes, transcripts, or tapes of MSRB meetings should

be made available, that agendas of the

board's meetings should be published in

advance, and that public comments on

proposed rules should be made available the minute they are

submitted.

But the MSRB should go much further by adopting a full

program of government in the sunshine. Meetings should

routinely be open unless the board votes to close them for a

justifiable reason such as the discussion of personalities or

financial matters that might upset the market.

While the GFOA wants more openness in the selection

of the five public members of the 15-member MSRB board,

it stops short of advocating any major change in the board's

makeup because that would require federal legislation that

might lead to new limits on issuers, such as federally

mandated registration and disclosure requirements.

But that is a short-sighted position because issuers have

a lot of clout in Congress and registration will never be

imposed unless there is a series of disasters in the market.

Instead, issuers should be pushing to change the makeup

of the MSRB from an underwriter-dominated club to a

selfregulator that gives equal representation to the three

essential elements of the muni market -- issuers, underwriters,

and investors.

If the MSRB operated more in the open and equitably

represented the market, it would be far more effective.

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