The status of municipal financial intermediaries after the financial crisis and Dodd-Frank: underwriters, insurers, advisors, and credit rating agencies

Through the process of financial intermediation, underwriters, bond insurers, municipal advisors, and the credit rating agencies serve a critical function in the raising of capital for state and local governments in the United States. Financial intermediation is important in all capital markets but especially the decentralized, over-the-counter municipal market. From the perspective of state and local governments and investors, reducing information asymmetry with the help of financial intermediaries can inure to the benefit of each party in revealing the true risk of the security offering. This chapter focuses on research advancements post the 2007/2008 financial crisis and the subsequent passage of the seminal 2010 Dodd-Frank Act that shed new light on the roles, regulation, and efficacy of these financial intermediaries in the municipal securities market.