WASHINGTON - The jury is still out on whether the proposed ban on political contributions will really work.

There had been preliminary signs that both the Municipal Securities Rulemaking Board's proposed rule and the voluntary ban pushed by the Securities and Exchange Commission were starting to have some effect.

The most telling sign came in what are only apocryphal reports that many elected officials, especially treasurers, are beginning to squeal because municipal underwriting firms are starting to refuse to cross their almost perpetually outstretched palms.

But that positive sign was overshadowed by two recent reports that indicate the old game of "pay to play" may still be alive and thriving.

One came in an article by Geoffrey A. Campbell in last Monday's edition of The Bond Buyer. Campbell reported that campaign finance documents for Virginia's hotly contested race for governor indicate that the MSRB's proposed rule has not dampened the enthusiasm of municipal firms and their employees for making contributions.

Even though the MSRB formally released its proposed rule on Aug. 30 and warned underwriters not to try to circumvent it before it is expected to go into effect in January, the campaign finance documents show that contributions to the two candidates from investment banks and their employees actually increased in September.

The other negative sign was contained in Charles Gasparino's Bond Buyer reports that four Wall Street executives who work for firms agreeing to the SEC's voluntary ban were listed as members of a committee to raise funds for New York State Comptroller H. Carl McCall.

The reports also show that one of the executives, Richard Jenrette, chief executive officer of the Equitable Cos., which owns Donaldson, Lufkin & Jenrette, gave money to McCall "within the last few weeks."

A spokeswoman for Jenrette contended that his involvement does not violate the agreement because he is chairman of DLJ's holding company, not an executive of its municipal bond division, and that his activities are not meant to try to obtain municipal bond business.

While the spokeswoman did not say if Jenrette feels he would be exempt from the MSRB's rule under the same circumstances, the implication is clear that Jenrette feels he would be exempt as long as he contends he did not intend to buy bond business.

If the executives of enough firms take the same position, both the voluntary ban and the MSRB's rule may fail. That will be especially true if the MSRB does not come up with something stronger than the intent standard that now serves as the centerpiece of its proposed rule.

If the board doesn't close that loophole and provide some clear guidelines when it meets to finalize its rule later this week, the name on the checks may be different, but the contributions game will live on.

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