WASHINGTON -- State treasurers urged the Municipal Securities Rulemaking Board yesterday to delay adopting any new rules governing political contributions until the board has fully analyzed the complex issues involved.

Lucille Maurer, president of the National Association of State Treasurers, made the plea in a two-page letter addressed to Charles W. Fish, the chairman of both the MSRB and Fish & Lederer Investment Counsel Inc. in Orange, Calif.

The letter was delivered to Fish yesterday as the MSRB started its four-day quarterly meeting this week in Colorado Springs, where it is expected to consider regulatory options aimed at quelling growing controversy over heavy political contributions by market participants to issuers.

Maurer, who is the Maryland state treasurer, warned that federal regulators may violate states' rights if they try to require state and local officials to disclose in official statements any political contributions received from dealers and other market participants. She said that the political contributions arena is an extremely complex one and that the board may be getting in over its head in trying to issue rules on the subject.

"This raises an issue of whether the federal government should intervene in the election laws of the individual states." Maurer said. [Moreover], until you have explored the web of complexities with state officials represented by such organizations as ours, and those representing governors, attorneys general, and others, it is premature to take action."

The NAST's letter came a day after the Public Securities Association issued a three-page policy statement urging the Securities and Exchange Commission to require issuers to disclose through the MSRB's central repository in Washington political contributions from all players competing in an offering.

The MSRB does not have authority to require such disclosure by issuers, but the board can recommend that the SEC propose such a rule.

The board is expected to consider a variety of approaches to regulating political contributions at this week's meeting, including a flat ban on contributions by dealers to state and local officials whose bonds they underwrite. Or the board could require dealers to disclose contributions to relevant state and local officials at the time of an underwriting through the board's central repository.

Maurer noted that as issuers, state treasurers are extremely concerned about recent allegations of illegal payments and other possible violations in connection with some major bond deals.

"[But] we are also concerned that there not be an overreaction and that the proposed corrections not be out of all proportion to the nature and extent of the perceived problems. Our experience with the federal laws and regulations makes us very wary."

Christopher Taylor, MSRB executive director, said yesterday he had not yet seen the group's letter and could not comment on it.

Catherine Spain, chief lobbyist for the Government Finance Officers Association, said, "I think the treasurers are making a very valid point, but I'm not sure that the MSRB will [be able to delay action). The congressional and SEC pressure is so great for them to do something."

But Maurer said, "I can't believe [board members] are fully aware of the complexities of it. Certainly, they haven't talked to treasurers. I'm not sure they've talked to comptrollers or governors. "

"It's not that I fault them for being concerned," Maurer said. "But we saw how people who thought they knew about taxes reached the conclusions that they did on regulations on the Tax Reform Act of 1986. We're just saying be careful. These are complicated things.

"If they want to control underwriters, fine. Let the underwriters send it to the MSRB. But don't. in the guise of controlling underwriters, put the burden on the state to determine what they should report and when. Keep us out of it. We [already] disclose under our state laws," Maurer said.

MSRB members interviewed Monday said they could not predict how they will vote on the question of banning political contributions or the other options under consideration. But they said that the board's top priority is to take whatever steps are needed to maintain the municipal market's reputation.

"It's high time that we opened this up and carefully examined it", said Robert Drysdale, president of PNC Securities Corp. in Pittsburgh. "I'm very concerned about the integrity of the market," he said. "The majority of bonds are owned by individuals. They have to feel it's an honest marketplace.

"As far as making my mind up, I have not. My approach is to go in and listen to arguments, Drysdale said. He added, however, that he is "not the type of guy" that will approve something that is "watered down."

One board member, who asked not to be identified, said a ban on contributions raises key legal questions. "There is constitutional law involved, "he said, referring to concerns that a ban on political contributions would be a violation of the U.S. Constitution's First Amendment guarantee of free speech. "We have to examine what our charter says we can and cannot do. "

Robert Inzer, treasurer of the city of Tallahassee, said, "I may flipflop three times before I actually vote. There are no perfect solutions. It's fraught with problems.

"I would hope that we would be able to find a solution that will address the problem short of a ban. But if in fact we are unable, I would be willing to consider that. " As for a requirement that market participants disclose contributions, Inzer said, "I'm not sure additional disclosure will fix it. Currently. most states have laws requiring disclosure of campaign contributions. That information is available."

Inzer said one thing he is particularly concerned about is the issue of finders. " He said the term referred to a person who is retained or paid by a firm solely to assist it in getting business through his or her political connections. "I believe it is a problem," he said, "that the industry is hiring firms and getting business based on who they hire and not on the quality of the proposal and services."'

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