Bond Houses' Enlightened Self-Interest
One of the more dramatic examples of enlightened self-interest occurred last week on Wall Street, of all places. Nine major bond firms - companies that underwrite bonds issued by state and local government bodies - proclaimed a voluntary moratorium on campaign contributions to politicians who award such business. This welcome step should be expanded and made permanent.
Several recent scandals related to politicians who received money from bond firms - Comptroller Elizabeth Holtzman's defeat for re-election in New York because she took bond money was the most dramatic instance - helped cause the industry to act. It also wants to head off government regulation, it is tired of paying money to politicians for the privilege of doing business, and it wants to salvage the industry's integrity.
Next week, the nine firms and any others who join them will meet with the Securities and Exchange Commission to obtain advice on what kind of permanent ban the SEC might approve. But a problem remains. Regulations are hard to write that would ban contributions by firms to officials who award the rights to the lucrative business of selling bonds to the public. …