Citigroup Opposes Applying Dodd-Frank to Municipal-Bond Market

Citigroup Inc., the second-largest U.S. municipal-bond underwriter last year, says applying the Dodd-Frank law regulating Wall Street to the market for state and local debt would raise costs for borrowers.

Municipal securities dealers such as Citigroup make it easier for investors to trade in the $3.7 trillion municipal market, cutting state and local borrowing costs, Citigroup’s Howard Marsh, a managing director, said in the Jan. 27 filing with the Federal Deposit Insurance Corp. The agency is writing rules to implement the 2010 law. While an exemption to limits on banks trading for their own accounts under the so-called Volcker Rule would apply to some types of municipal bonds, such as general-obligation debt, it wouldn’t apply to others.