Changing Roles of Buyers and Sellers of Municipal Bonds: One Participant’s View
William J. Darusmont Managing Partner TBD Capital LLC
There have been more changes since the early 1970s in municipal bonds than in any other securities class except derivatives. The closest would probably be the conversion to negotiated commissions by the New York Stock Exchange.
I was hired as a junior investment officer in the largest multistate bank holding company, which, at $18 billion, was one of the top 20 financial institutions in the United States (how things have changed). My boss and mentor in a four-person department had over 20-years experience selling municipal bonds for some of the top firms in the company and this gave me the advantage of learning both the buy and sell side of the business. It also afforded me the opportunity to meet some of the top names in the business. Our banks portfolios were about 60% U.S. government securities and 40% municipal bonds.
It was a very close-knit community and your word was your bond. Over the phone, bonds were purchased and sold with confirmations arriving three or more days later and settlements a week or more away. This was distressing to our chief financial officer who thought everything should be in writing. Yet over my ten years with the organization, I never saw one of those verbal contracts broken.
As a major buyer, and with three dealer banks in our system, we were treated very well. Even on new issues with major interest, ...

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