The Tennessean
May 10, 2009 Sunday
SECTION: NEWS
LENGTH: 500 words
HEADLINE: Seivers and bank maintain close ties
BY BRAD SCHRADE
THE TENNESSEAN
In Tennessee, if Municipal Bond Fund President and CEO Charles "Bones" Seivers goes somewhere, Bank of America is often not far behind.
The bank's tight relationship with the bond fund since 1994 has earned both sides a lot of money. It also has been fraught with disclosure issues and potential conflicts of interest that few know about.
Seivers, a former elected official in Clinton, Tenn., has used his political skill to tirelessly sell the bond fund's services across the state, issuing $3 billion in loans to local governments over the fund's 24-year history.
But the bank's relationship with Seivers has extended beyond the fund. Seivers was paid as a private consultant to assist the bank in "developing and/or expanding relationships" in Tennessee at the same time he was getting paid to lead the bond fund, according to disclosures the bank filed with the federal Municipal Securities Rulemaking Board.
He helped seal millions in bond deals for the bank in Jackson with the Jackson Energy Authority and the Jackson-Madison county hospital authority in 2003. He said the deals weren't eligible for the bond fund, which is always his first priority, so he used his contacts to help bring the sides together.
"If I'm going to do it, I'm going to get paid for it," Seivers said. "The bank's going to get the business, the bank ought to pay me. If I'm going to help the energy authority and get them something they couldn't have, they ought to pay me. That's what you do as a private contractor."
At the time, then-Jackson Mayor Charles Farmer was chairman of the bond fund. He said the arrangement was disclosed to the bond fund board and he didn't see an issue with it because it wasn't interfering with the bond fund.
"I'm sure it would help anywhere in the state to have people he does business with say he's a good person to do business with," said Farmer, who's now on the Tennessee Ethics Commission.
Seivers said his outside relationship with the bank has ended, but he has other outside relationships that he won't disclose. He said he discloses them to the bond fund's board and board members say they don't have a problem with the arrangement.
A Bank of America spokeswoman did not respond to the newspaper's questions before deadline Friday.
University of Alabama finance professor and municipal finance expert Robert Brooks said the arrangement raises conflict-of-interest questions and has the whiff of pay-to-play scenarios that have long plagued municipal finance. When there's a gatekeeper to conduct business, he said, it drives up costs.
"We as a people need to have as clean a government as we can possibly have and it's in our interest to root these kinds of things out," Brooks said. "It makes the markets more inefficient. There are people out there who do a very good job delivering capital to those people who need it, but have just decided that the municipal corner of the business smells too bad."
Brad Schrade can be reached at 615-259-8086 or bschrade@tennessean.com
