Eight years after the financial crisis created global awareness about how little we all knew about the health and integrity of the economy, the strengthening of one city-focused regulatory organization points to improved oversight over government financial dealings.

The Municipal Securities Rulemaking Board, which watches the $3.7 trillion municipal market, has grown in its scope and prominence over time, putting pressure on state and local governments to be more financially transparent. Recently the MSRB called attention to the way municipalities are increasingly pursuing private bank loans, and the need for these deals to be publicly disclosed.

It also maintains the Electronic Municipal Market Access (EMMA) website, which hosts financial disclosures, trade data and information about municipal market trends. Earlier this month, it was announced that Moody’s is going to be allowing its ratings to be included in the database for the first time.

From the outside, the world of municipal markets might seem wonky and impenetrable, but MSRB Executive Director Lynette Kelly does a great job at explaining how the organization provides critical, powerful — and straightforward — tools that promote good governance.

Lynette Kelly (Credit: MSRB)

For people who might not understand exactly what MSRB does, could you explain the organization’s role and relationship to state and local governments?
MSRB was created by Congress in 1975 with the mission to protect investors in the municipal securities market. Historically the municipal market has been around for about 200 years. At the very beginning of our country, states and territories financed the railroads. [In modern times], a lot of public-purpose projects are financed by municipal bonds. Because they’re issued by state and local governments, constitutionally there isn’t direct federal oversight over the issuance of state and municipal bonds. In the 1970s there were some issues and scandals in the market and so Congress decided to create MSRB as a self-regulatory organization to address some of these issues.

Fast-forward to the [Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010], our mandate was expanded not only to protect investors in the market, but also to protect issuers. In addition to regulating banks and brokering dealers, we also now have the responsibility to regulate municipal advisors.

What is the significance of the EMMA website?
It was a pretty revolutionary initiative and endeavor. There are about 50,000 different state and local governments who have legal authority to issue bonds. That’s a huge number compared to about 5,000 corporations.

The scale of the municipal market is so big. There are over 1.3 million individual municipal bonds outstanding. The size and diversity of the market really isn’t comparable to any other market out there.

All of the information is available from one place for free — and by information, I mean primary offering documents, continuing disclosures, trade data, interest rate data and ratings. There’s just a treasure trove of information on the website. It’s presented in a way that is incredibly valuable not only for holders of those bonds or investors, but also for journalists, taxpayers, academics and others who really want access to this information. It’s been heralded as probably the most important advancement in the municipal market in the past 50 years.

What cities do you feel like are on the forefront of transparency and public disclosures?
Because they come to market more frequently, the websites of any of the large issuers in our market are considered to be more up-to-date, so that’s places like California, New York, Texas and Massachusetts.

The MSRB really wants to make sure that the total indebtedness of the state and local government is public and that interested parties — bondholders from our perspective, but also citizens, the media and others — have access to the entirety of the indebtedness picture of the issuer.

How can citizens push for more financial transparency from state and local governments?
I think that just to make sure that people participate in the democratic process — to go to city council meetings, read the newspapers, look at the budget from the city. You can ask questions and engage with the city when the financial statements come out. Usually the local media takes the lead with things like that, but I do think the more citizens are aware [the better].

For example, there’s another big issue with the health of state and local governments, which is pension liabilities. Five years ago, nobody ever heard about it, nobody talked about it. Now, some state and local governments are having to choose between paying pensions and laying off police or teachers.

More and more citizens are now voicing their views and opinions and electing local leaders on where they are on one side or another. You see that playing out in some distressed cities. It’s too bad that things had to get to a point of being a problem before people took interest, but that seems to have been the case.

Alexis Stephens was Next City’s 2014-2015 equitable cities fellow. She’s written about housing, pop culture, global music subcultures, and more for publications like Shelterforce, Rolling Stone, SPIN, and MTV Iggy. She has a B.A. in urban studies from Barnard College and an M.S. in historic preservation from the University of Pennsylvania.

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