WASHINGTON -- The National Association of State Treasurers told regulators last week that it is developing guidelines for treasurers to follow to disclose campaign contributions they receive from bond underwriters.
Lucille Maurer, the association's president, made the announcement in a letter dated Nov. 30 that was sent to Securities and Exchange Commission Chairman Arthur Levitt Jr.
Maurer also said in the letter that the group plans to invite a number of issuer groups to debate the political contributions issue at a public roundtable to be announced shortly.
"We are in the process of looking at what each state requires," said Utah Treasurer Ed Alter, who is heading the effort to write the guidelines. "We've decided we better look at the consistency of statutes and their thoroughness. To the extent that we find some deficiency, we are going to try to promulgate some kind of standardized disclosure [model] that we as treasurers can feel comfortable with."
While all states have political contributions standards, they often differ. Some states, for instance, do not require reporting of the occupation of the donor, Alter said.
The letter came as treasurers and other issuers are under pressure from Levitt to follow the lead of 17 Wall Street firms and voluntarily agree to stop accepting political contributions from the underwriters who handle their offerings.
The 17 firms agreed Oct. 18 to bar their municipal departments from contributing to state and local officials who are responsible for awarding lucrative negotiated deals. Ten days later Levitt wrote to 11 trade groups representing issuers, bond lawyers, dealers, and financial advisers, urging them to join the Wall Street firms in enacting voluntary bans.
Levitt's pressure on state and local officials has enraged some issuer groups. For instance, the National League of Cities adopted a resolution Sunday condemning a political contributions rule approved by the Municipal Securities Rulemaking Board last month.
The rule would bar dealers who make contributions to politicians from doing business for two years with the cities and states served by those officials. Details of the MSRB rule, which must be approved by the SEC, are expected soon.
The league's resolution charges that the MSRB rule sets a double standard for the electoral process because contributions to federal officials would not be banned. The rule also presumes that if an elected official accepts a legitimate contribution, then that official will be unable to carry out his or her responsibility to taxpayers, the league said.
Also last week, the Florida Association of Counties adopted a resolution opposing the MSRB's rule. It also distributed to Florida county commissioners a sample letter that they can send to the 17 Wall Street firms that signed the voluntary ban. The letter vows to boycott the firms when the issuer is seeking underwritters for negotiated offerings.
Catherine Spain, director of the federal liaison center for the Government Finance Officers Association, said yesterday these reactions may only be the "tip of the iceberg."
"People are starting to react," Spain said in a telephone interview. "Most officials have not been all that aware of this. It's starting to filter down." Spain said that the GFOA's debt committee will discuss Levitt's Oct. 28 letter to groups at the association's winter meeting next month in Washington.
"A lot of issuers resent the fact that this has been turned into a feeding frenzy," Alter said. "Most issuers have been clean and they don't like to be tarred with the current wave" of public outrage resulting from a "couple of alleged abuses." This is "tremendous overkill in a lot of peoples' minds."
Meanwhile, NAST president Maurer said in her letter to Levitt last week that a 17-member task force named this fall is reviewing the SEC's call for a voluntary ban and that her group shares Levitt's desire to protect the integrity of the market.
The task force, chaired by Missouri Treasurer Bob Holden, was established to deal with the public's perception of campaign finance abuses in the municipal market, to develop a code of ethics for use by treasurers, and to work with other market groups in addressing these problems.
The Western States Treasurers Association approved a resolution in mid-October saying it supports "fundamental and comprehensive campaign finance reform" as long as such reforms are implemented at all levels of government, including federal elected officials.
Maurer told Levitt that Alter will chair a subgroup of the 17-member task force charged with developing preliminary recommendations on campaign finance disclosure before the month is out.
Maurer said the treasurers have been working with the cities' league, the National Governors Association, the National Conference of State Legislatures, the United States Conference of Mayors, and the National Association of Counties.
"We believe it might be appropriate for you to address similar letters to these organizations," Maurer said, referring to the fact that Levitt sent his Oct. 28 letter to only two issuer groups, the GFOA and the NAST.