This page has been archived and commenting is disabled.
David Kotok: James A. Lebenthal (June 22, 1928-November 14, 2014)
Great obituary for a Wall Street legend -- Chris
James A. Lebenthal (June 22, 1928-November 14, 2014)
November 15, 2014
There are iconic names in nearly every discipline and specialty. The municipal bond world just lost one.
James Lebenthal devoted his long professional career to Munis. He was the center point of a three-generation effort in the Muni corner of the financial markets. The family history started in the days when tax-free municipal bonds were denominated in $1000 units and issued in bearer form, when one had to obtain the interest payments by clipping off a coupon with a pair of scissors and presenting it to a paying agent.
For longer than a half century, everyone in the Muni world knew the name Lebenthal. He was their champion in a highly public way and advertised on behalf of tax-free bonds with great creativity. He explained how the Muni bond paid for the infrastructure of state and local governments. And he defended Munis from political attacks that would have removed their tax-exempt status.
His firm's national recognition was as a Muni "bond shop." Their reputation was for fairness in pricing and for honoring their executions. Their service was responsive, whether the transaction involved $50,000 or $5 million. Cumberland Advisors, its principals, and portfolio managers knew the firm's leaders for decades and still maintain that contact with James’s daughter, Alexandra.
My partner John Mousseau and I were discussing the great personalities in the Muni world. John had this recollection of Jim:
Back in the early 1990s I was giving lectures sponsored by the Bond Market Association to new people in the municipal bond industry. Much to my surprise, my co-lecturer was Jim Lebenthal. He was already a legend and still a major force in the business. Being on a pretty low rung compared to Jim, I was apprehensive. Jim could not have been more gracious. He introduced me as “my friend John from Shearson.” He gave me more than half the presentation time, and he continued to be inclusive later on when we answered questions – he would turn and say, “What do you think, John?” It was a singular act of politeness and kindness that I have never forgotten.
Later, when I met Jim at an industry event, I thanked him for his earlier kindness and remarked how great it was that he had been in the business such a long time and yet retained such a great passion for it. And he said, “John, don't you love investments that you can drive on, drive over, go to school in, and get well in?” I've co-opted Jim's line many times, and my advice for anyone in the Muni business is, BE LIKE JIM.
Cumberland Advisors, its partners, and associates extend our condolences to Alexandra and all those in the Lebenthal family. Our industry has lost a legacy creator. May he Rest in Peace.
David R. Kotok, Chairman and Chief Investment Officer
»
- advertisements -
I always like to hear of someone who has conducted himself with integrety. Sounds like he was a good man... not so easy to find these days.
R.I.P. James Lebenthal
I can tell it's Monday....people seem a little grumpy. To some degree, blaming muni bonds for all the indebtedness of States/Cities/etc. is sort of like blaming guns for crime. The munis didn't cause the problem....it was the overzealous, eager-to-get-relected asshole politicans who caused the problem....(and of course the people who voted for them).
As far as I can tell, Lebenthal was honest in his dealings, and a gentleman in conduct.
But as the article states, this man actively lobbied for the tax prference. If the politicians did not have access to low-cost debt, might they have thought twice about borrowing and wasting?
Good point...and one that drives to the heart of the matter.
The tax free status is what allows Muni's to compete in an open market. The supposedly secure status of the bond allows people to invest at a market established point of risk/reward. As a financial instrument, this should be a reasonable approach to get money for improvements, etc. In the beginning, this debt was somewhat lower than going to a bank, but not exponentially so.
The problem kicks in when the overall market mechanisms go haywire with CDS, derivatives, etc. obscuring the real 'cost of money'. I submit that the problem is too many 'derivative' type instruments and the dissolution of any wall between banking and speculation.
I agree with you about derivatives, but isn't handicapping other financial instruments by the government entities giving tax free status to munis inherently bad too. Crowding out capital access to private concerns. Plus, a lot of munis were sold as bonds for improvement which were reallocated to ideological social programs and the like. But I think you agree on the corruption point.
Overall, muni's didn't really handicap other instruments. For decades, these were lower risk, lower return instruments, intended to 'diversify' portfolios and establish a risk floor. Higher risk financial instruments never suffered in competition with Munis.
As for the reallocation of funds....I agree 100%. Funds ostensibly targeted for true 'infrastructure', slowly but surely got reallocated to more "fluffy" causes....and then when the basic fabric of the markets began to fray....(this started a LONG time ago)....Muni's became a way to forestall other State/City/local financial problems.
I a perfect world, the "unseen hand of the market" is supposed correct this. In the real world, lack of regulatory oversight, coupled with the overall increasing of money supply (inflation) by the Fed, masked the problem.....until it was too late.
Here we all start our legitimate complaints about the Fed and money policy in general.
So a heroin dealer preying on an addicted clientelle is not to be held responsibie at all?
If I were to make the analogy, I would probably incline more towards using the Fed "money printing" as heroin....and in that we agree.
Municipal Bonds, as a concept and in practice, offer a useful method for financing, and I see a place for them in the scheme of things.
Yes....they did get abused....but they would have/could have corrected if not for the continual bailouts and money printing which removes all moral hazard.
Must explain the rash of downvotes that went through.
Yep Lebenthal a legacy creator of debt and graft. Just like Berkkake, Blankfiend, Greedscam, Fink (no need to butcher the name as it fits), and the other skimming tribe members.
Shockingly enough his Wiki bio doesn't mention his tribal status as so many of them prominently do. Makes one wonder why. Though it does identify him as a Princeton ivy league asshole. Which I'm sure qualified him another master of the universe over others.
1 down, lots more to go. Fuck'em!
EDIT: Same tribe member David R. Kotok giving accolades to another tribe member. That David Kotok?
LOL,
I'm sure he's dining with Jesus tonight.
The fucker is rotting excrement and sulfurous bile with the rest of his tribemen.
No one cares about this person who made his money taking advantage of a big federal tax break. Fuck him.
The sins of the father shall be paid for by his sons.
[duplicated]
RIP, but the legacy of being part of a system that leaves municipalities and states heavily indebted for expenditures, including excessive pension promises, may not be something to be proud of.
One may also come to the conclusion that the tax preference, and thus, financing preference accorded to munis, and hence, government, may have contributed to de-industrialization and capital flight. Making us all poorer in the long run, except for those able to skim.
Federal tax subsities through the muni special intrest group given to hospitals are rarely accounted for in assessments of health care costs. It is another obfuscation that leverages up the
"Stupidity of the American Voter"Gruber is that you?