Several elements of the Municipal Securities Rulemaking Board’s proposed fiduciary standard for municipal advisers are problematic, ABA said in a comment letter. For example, the proposal would ban principal transactions between a bank serving as a municipal adviser and any of its affiliates with the municipality it is advising for the duration of the advisory engagement.
This prohibition, ABA said, would force banks to decide whether they wanted to provide advisory services to municipalities or provide all of the other traditional banking services — such as deposit accounts, loans and cash management services — to municipalities. Municipalities would see their ability to have a broad range of services from their bank curtailed, the association added.
Read the letter.