ABA Comments on Disclosure for Muni Loans

ABA yesterday urged the National Federation of Municipal Analysts to remove from its draft recommended best practices a requirement to disclose bank loans to municipalities in advance of loan closing.

“ABA supports the prompt disclosure of bank loans following closing,” ABA said. “We believe that advance disclosure and summary form disclosure are not required to achieve transparency and will plainly increase the transaction costs associated with bank loans, making them less attractive for municipal borrowers.”

Many banks defer to the municipal entities, or obligors, in matters of bank loan disclosure, and other banks encourage obligors to post redacted loan documents on a website of the Municipal Securities Rulemaking Board. “[W]e believe that disclosure and transparency of bank loans is achievable without prejudicing the interests of other constituents of the municipal marketplace, particularly the interests of the [obligors] with whom ABA’s and the NFMA’s members do business,” ABA said. For more information, contact ABA’s Cris Naser.