Already the long reach of Dodd-Frank into muniland is having an effect. Al.com tells the story (emphasis mine):
The Wall Street investment bank leading Jefferson County’s pitch to exit Chapter 9 municipal bankruptcy could be violating securities law if it serves as an underwriter in the deal, a lawsuit brought by Jefferson County sewer ratepayers says.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, an investment bank may not act as both a financial advisor to a municipal issuer and as an underwriter when that debt goes to market. Serving in both roles could create a conflict of interest for the bank, and the practice was outlawed in 2011.
That appears to have been what’s happening as part of Jefferson County’s plan to exit bankruptcy.
Dodd-Frank is the first substantive law for muniland since 1975. One of the law’s most important provisions is that it added “municipal adviser” as a new category subject to regulation and disciplinary authority. Dodd-Frank outlawed the practice of an underwriter serving as a municipal adviser and then switching hats to underwrite the same deal.