The state comptroller is proposing an overhaul of regulations for municipal bond sales. The move comes after some towns and counties in Tennessee saw massive hikes in interest rates, stemming from complex deals with investment bank Morgan Keegan.
Comptroller Justin Wilson wants the state’s guidelines to require more oversight, as well as avert future conflicts of interest.
His proposal would effectively prevent smaller governments from taking on certain types of risky debt. Those that did so would have to prove a full understanding of what they’re getting into.
Wilson says the whole process should be transparent.
“It’s remarkable that this area has not required the typical disclosure that we see for a stock or for a long-term bond.”
Last month the New York Times revealed the state had approved course work on bond derivatives by Morgan Keegan. The bank taught municipalities about bond sales before making deals for them.
Wilson says most of his proposal can be done internally, but is open to public comment for the next month before making any changes.
On Air - 90.3 WPLN-FM