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.
