NY Times reports today that the investigation that ended New Mexico Gov. Bill Richardson's cabinet future ties into national concerns about the municipal bond business -- bid rigging, pay-to-play, etc.
Arkansas has seen its share of bond scandal. The allocation of bond business over the years has been famoussy (make that infamously) political, with fortunes of governors past rising and falling in direct relationship to business directed to the powerhouse Stephens Inc., and other bond houses that occasionally bought into political campaigns in hopes of reallocating state business.
Now and again, Arkansas securities industry employees have been convicted of paying public officials to get business -- episodes always explained as the "bad apple"syndrome, not indicative of widespread corruption. No local angle is mentioned, but says the Times:
Three federal agencies and a loose consortium of state attorneys general have for several years been gathering evidence of what appears to be collusion among the banks and other companies that have helped state and local governments take approximately $400 billion worth of municipal notes and bonds to market each year.
E-mail messages, taped phone conversations and other court documents suggest that companies did not engage in open competition for this lucrative business, but secretly divided it among themselves, imposing layers of excess cost on local governments, violating the federal rules for tax-exempt bonds and making questionable payments and campaign contributions to local officials who could steer them business. In some cases, they created exotic financial structures that blew up.
People with knowledge of the evidence say investigators are not just looking at a few bad apples, but also at the way an entire market has operated for years.
I assume the Arkanas a.g. will let us know if his office is joining in this effort. Or, conversely, that the Arkansas financial industry is pristinely pure.