Municipal Bond Underwriters Back Political Contribution Ban

More than 40 municipal bond underwriting firms have endorsed a self-imposed ban on political contributions as a way of avoiding possible conflicts of interest and allegations of influence peddling.

Nineteen of the firms met in New York on Wednesday with Securities and Exchange Commission Chairman Arthur Levitt Jr. to spell out how the initiative will be implemented.

Meanwhile, the industry’s governing body, the Municipal Securities Rulemaking Board, said it is delaying the imposition of a rule that bars companies and their employees from doing business with any municipal issuer for two years after making political contributions to any of the issuer’s officials.

“The fundamental provisions of the rule will not change,” said Christopher Taylor, the board’s executive director. He denied that the group is pulling back from its earlier tough stance, which would have applied to all contributions after Jan. 1.

Rather, he said, the board was unable to publish the rule in time to meet its original deadline.

“We think it’s only fair to the industry to give them the text of the rule before they have to write procedures to comply with it,” Taylor said, adding that the board will meet Monday in New York to decide on the final wording of the rule.