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Tag Archive: Dodd-Frank

OpenGov Voices: A Transparent Approach to Understanding Local Government Debt

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Disclaimer: The opinions expressed by the guest blogger and those providing comments are theirs alone and do not reflect the opinions of the Sunlight Foundation or any employee thereof. Sunlight Joffe_Headshot_1Foundation is not responsible for the accuracy of any of the information within the guest blog.

Marc Joffe is the founder of Public Sector Credit Solutions (PSCS) which applies open data and analytics to rating government bonds. Before starting PSCS, Marc was a Senior Director at Moody’s Analytics. You can contact him at marc@publicsectorcredit.org. Marc is also one of the winners of Sunlight Foundation’s OpenGov Grants.

High profile bankruptcy filings by Detroit and other cities, along with concerns about public employee pensions, are increasing borrowing costs for state and local governments. Higher interest payments to bondholders mean higher taxes and fewer services. However, with transparent data and analytics, local government bonds can get reasonable interest rates -- as this post will illustrate.

Over the last 70 years, municipal bond defaults have been rare. In a typical year, no more than one in 1,000 municipalities fail to make timely payments on their tax supported debt. Also, interest on municipal bonds is exempt from federal income taxes and usually free of state income taxes as well.

Because of their low risk and favorable tax treatment, municipal bonds have typically yielded less than US Treasury bonds – making it easy for states, cities, counties and school districts to finance new infrastructure. Time series data available from the Federal Reserve (a portion of which is depicted in the accompanying graph) show that yields on “munis” were lower than Treasuries from 1953 until the 2008 financial crisis. This discount returned briefly in 2010, but since Meredith Whitney predicted a wave of municipal bond defaults on 60 Minutes in December 2010, muni yields have exceeded Treasury yields – often by substantial margins.

Municipal and Treasury data

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What Have they Got to Hide? Lawmakers Should Allow Meetings with Lobbyists to be Disclosed

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The sign for K Street, NW in DC - the home of lobbying in America.Recently, my colleague Lee Drutman concluded that banks met with regulators at the Federal Reserve, Treasury and the Commodities Futures Trading Commission more than five times as often as reform-minded consumer groups in the past two years.  His analysis provides a valuable tool for the media, academics and the public to better understand who is trying to shape financial industry regulations. His conclusions, and the follow up questions that can now be asked (Did the banks get what they wanted? Are consumers’ interests being served?) are only possible because the agencies posted information about the meetings online. Which begs the question: If the regulators can provide information about who is trying to influence the regulations they write, why doesn’t the public have access to similar information about meetings Members of Congress or their staff have with lobbyists?

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What the banks’ three-year war on Dodd-Frank looks like

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Graphics by Ben Chartoff and Amy Cesal. Network analysis by Alexander Furnas. In the three years since President Barack Obama signed the Dodd–Frank Wall Street Reform and Consumer Protection Act, federal regulators charged with implementing it have opened their doors to the biggest banks over and over again – 14 times as frequently as they have to representatives of consumer and pro-financial reform groups, a new Sunlight Foundation analysis finds. By most accounts, the banks’ besiege-the-regulators strategy has yielded rich rewards in sapping, slowing, and stymieing regulations intended to prevent another massive financial crisis. The emerging consensus is that Dodd-Frank implementation is limping, while the big banks are poised to return to being the most profitable industry in the U.S. Sunlight’s analysis is based on logs of Dodd-Frank meetings at the Commodities Futures Trading Commission, the Treasury, and the Federal Reserve Board., available through Sunlight’s Dodd-Frank Meetings Tracker. Because of problems with data quality and comprehensiveness, we had to exclude two other regulatory agencies (the Securities and Exchange Commission and the Federal Deposit Insurance Commission). And because of the time involved in data cleaning, we also excluded 22 percent of reported meetings – those that did not include “active” players. (By “active” we mean organizations that showed up at least five times in meeting logs.) For more on the data, see our methodology section at the end of this post, and read our companion piece, “Dodd-Frank meeting data need improvement.” Still, the imbalances our analysis reveals are so overwhelming that we can be confident that they are not merely a feature of the reporting practices.

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