The $3.7 trillion US municipal bond market is plagued by illiquidity, high costs and limited investor knowledge.
These conditions result in a transfer of wealth from taxpayers and small investors to market insiders. Because today’s municipal bond market is the product of two centuries of evolution and is governed by a complex web of Congressional, regulatory, self-regulatory and state-level mandates, it cannot be changed overnight.
But by supporting transparency and by educating market participants, the Center strives to improve the market over the long term.
The Need for Greater Transparency
Efficient markets are supported by an abundance of free, readily accessible data. Investors in large cap US equities, for example, can obtain up-to-date information and analysis on companies at no cost through multiple apps and web sites. This kind of information is much harder to obtain for state and local government bond issuers. The information gap between private sector and public sector security issuers is especially unfortunate because so many people other than municipal bond investors are touched by public finance.
Taxpayers, contractors, public sector employees and service beneficiaries also have a stake in the financial welfare of governments and would thus benefit from high quality, free and timely government finance information. While many governments provide financial information on their web sites, it is not standardized and often provided in the form of PDF documents. This inhibits the ability of investors, analysts and citizens to compare the fiscal performance of different governments. Comparative data of this sort is collected and sold by market data vendors at substantial cost, effectively excluding small investors and regular citizens from access to this information.
Details about the municipal bonds sold by state and local governments are also hard to gather. Most of this information is stored in very lengthy PDF documents that can only be obtained through relatively laborious web searches or via subscriptions. One result of this lack of document availability is that many government finance professionals do not realize that they are paying excessive interest rates and bond issuance costs.
Providing Accessible Government Finance Data
The Center addresses transparency issues by collecting large volumes of government finance and bond documents, harvesting information from them and presenting their data for free on our web site and via partner sites and apps. In the future, we hope to also provide bulk data for download if and when we have sufficient funding.
Most of our data is provided by GovWiki – our open source government data platform.
… And Asking Others to Do So
The Municipal Securities Rulemaking Board, the Census Bureau and many state governments collect large volumes of municipal finance data. The Center urges these entities to make more of their data publicly available and to provide this data in machine readable formats in addition to PDFs.
We fulfill our advocacy role by blogging, writing op-eds and speaking to relevant decision makers.
Finally, we advocate for other reforms that would increase market efficiency such as replacement of the municipal bond tax exemption with a direct federal subsidy to municipal bond issuers and the relaxation of minimum authorized denomination requirements.
Our advocacy is strictly issue oriented. As a 501(c)(3) organization we do not support or oppose candidates for office.