The ballroom erupted in applause Thursday night when the two honorees at the Municipal Forum of New York's annual awards dinner defended recent remarks by Goldman, Sachs & Co. managing director Michael McCarthy.
McCarthy had said in a speech to the PSA in March, also to loud applause, that while municipal regulatory reforms have laudable goals, their implementation has been burdensome for municipal broker-dealers.
The two honorees - New York State Environmental Facilities Corp. president Terry Agriss and O'Brien Partners chairman R. Fenn Putman - both referred to remarks by Goldman's top municipal banker as they thanked some 540 market participants who attended the black-tie event, held at New York City's Pierre Hotel.
Calling the municipal market "the most honest industry in the world," Putman said, "I think we do a great job in this business, though I can't articulate it as well as Mike McCarthy."
On Friday, Putman said he was alluding to McCarthy's speech at the PSA's annual meeting in Phoenix and to SEC chairman Arthur Levitt's criticism of those remarks.
"These are regulations that we're for," Putman said, "but sometimes the red tape is more costly than it should be in order to get the job done."
Overzealous regulators are the problem, Putman said. "When you get a bunch of people trying to do something, sometimes they get carried away with their jobs," he said.
"The rules and regulations themselves - I don't think anybody has a real complaint. We're for regulation. But it's like finding an elephant in the bathroom - it's not difficult. But if you find a speck of dust and miss the elephant, maybe you're not doing your job right."
In the speech to the PSA, McCarthy outlined what he later called "transitional issues facing the public finance industry as it adjusts to a new regulatory environment."
Levitt made municipal market reform a top priority when he became chairman of the Securities and Exchange Commission in 1993. Key changes since then include the SEC's secondary market disclosure rules, and Municipal Securities Rulemaking Board's Rule G-37 which effectively bans municipal broker-dealers from engaging in pay-to-play practices, and improved price transparency.
In his award acceptance speech, Putman also said he was dismayed by coverage last month of recommendations by New York State Sen. Franz Leichter that G-37 be expanded to ban donations to political parties, committees, and causes. Leichter said pay-to-play continues as dealers exploit loopholes in the rule.
Putman said the municipal industry's role in pushing for the adoption of G-37 makes it "the only industry in the country" that has supported campaign finance reform.
Agriss, for her part, said, "Mike McCarthy was right a few weeks ago." She did not elaborate, and declined to do so later, but the crowd reacted immediately and enthusiastically.
Neither McCarthy nor SEC officials would comment.
