SEC Begins Hearings on State of Municipal Securities Markets

“From 1999 to 2009, issuers defaulted on over $24 billion in municipal bonds out of a total of $3.4 trillion issued. In 2009 alone, 194 municipal bond issues defaulted with an overall dollar amount of almost $7 billion in bonds,” Walter said.

Because the municipal market features government and private sector overlap, some industry officials suggested looking to the way in which corporate disclosure works as a framework for municipal disclosure. Walter responded by saying that while she believes much can be learned from the corporate world, it is “essential that we recognize the differences in the municipal and corporate finance worlds and we work together to evaluate what an appropriate framework for municipal finance disclosure should be in the future.”

Other hearings will be conducted in Chicago; Washington; Tallahassee, Fla.; and Austin, Texas. Each hearing will include participants from the local region and will examine different sets of issues, including investor protection and education; financial reporting and accounting; market stability and liquidity; the Municipal Securities Rulemaking Board; municipalities as conduit borrowers; offering participants, professionals and market intermediaries; Build America Bonds; and 529 plans.

At the conclusion of all of the hearings, the Commission staff will prepare a report concerning what we have learned, including their recommendations for further action that we should pursue, which may include legislation, rulemaking and changes in industry practice.