Cox says Municipalities under stress as well

Though much of the discussion in this Oversight Senate hearing is on Greenspan’s testimony, SEC Chairman Cox’s testimony is interesting as well. He says concerns are being felt in Municipalities as well:

Now that the credit crisis has reached the state and local level, investors need to know what they own.

This multi-trillion dollar market entails many of the same risks and is subject to the same abuses as other parts of the capital markets. Individual investors own nearly two-thirds of municipal securities, directly or through funds, and yet neither the SEC nor any federal regulator has the authority to protect investors by insisting on full disclosure. The problems in Jefferson County, Alabama are only the most recent reminder of what can go wrong.

The multi-billion dollar fraud in the City of San Diego, in which we charged five former City employees this past year, has injured investors and taxpayers alike. The economic slowdown will now make it even harder for many states and localities to meet their obligations. Many municipalities continue to use interest rate swaps in ways that expose them to the risk that the financial institution on the other side of the derivatives contract may fail.

That is why, repeatedly over the last two years, I have asked Congress to give the SEC the authority to bring municipal finance disclosure at least up to par with corporate disclosure. Knowing what we now know, I would have begun this campaign on my first day on the job.

So, this market is also largely unregulated (like the credit derivatives market) and still has grown to a trillion dollar market.

2 Responses to “Cox says Municipalities under stress as well”

  1. Jitu Naidu Says:


    must surely interest you – enjoi !

  2. Margo Says:

    радует, что вы не останавливаетесь и не забрасываете свой блог как некоторые

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