Bond Advice Leaves Pain in Its Wake

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David Rubin built a big business over two decades crisscrossing the country to show local governments how to raise more money.

But a close look reveals that his consulting firm, CDR Financial Products of Beverly Hills, Calif., left pain in its wake from Florida to New Mexico. The Internal Revenue Service has cracked down on dozens of communities, which have been saddled with unfinished public projects, financial losses and more debt than they can manage.

Though consultants like CDR and Mr. Rubin turn up again and again in places where bond deals have turned sour, they are virtually unregulated. The Municipal Securities Rulemaking Board is now appealing to Congress to expand its authority to cover consultants and other advisers in the municipal bond business as well as bankers and brokers.

Christopher Taylor, who retired as director of the rules board in 2007, says even harsher action is needed. Common industry practices have led governments to refinance their debts more often than necessary and take on excessive risk, he says, adding that some practices should be banned outright.

http://www.nytimes.com/2009/02/17/business/17muni.html?th&emc=th