YOU’VE got the power. Why not use it?


That’s a question for the Securities and Exchange Commission when it comes to the murky market for municipal bonds.


Munis might strike many people as dull. But this market is huge — and hugely important. Munis, after all, are how government is financed at the state and local level, where life actually gets lived.


So calls for greater oversight are welcome, particularly given how Wall Street has hornswoggled some muni issuers over the years. In a report last week, the S.E.C. essentially asked for more power over this market, and called for greater disclosure by issuers — that is, the states, cities, towns and authorities that sell new munis. But the commission said it couldn’t act without Congress’s help.


In light of the report, it’s worth looking at what the S.E.C. has been up to in the municipal bond market. While the commission has been active in protecting investors from some deceptive practices, it has been less inclined to take action on behalf of issuers against financial firms that underwrite these bonds. This, despite the fact that the commission has wide leeway to do just that under fair-dealing rules that have governed the muni market for decades.


Rules requiring fairness in this market state that participants must not be deceptive, dishonest or unfair in their practices. The regulations apply to the sale of municipal bonds to investors and to underwriters’ interactions with issuers; fraud need not be alleged in a fair-dealing case.


The rules recognize that issuers of municipal bonds can be financially unsophisticated, particularly next to Wall Streeters. Public officials who run school districts or water authorities may not be as savvy as corporate executives. Muni issuers rely heavily on underwriters, and those firms have a higher duty to deal fairly with them.


In short, these are not buyer-beware transactions.


And yet, at a time when public debt issuers nationwide are being hurt by complex, derivatives-laced deals that Wall Street pushed — not to mention lean budgets in this tough economy — the S.E.C. has brought few cases against firms that arranged these deals. It’s hard to believe that every municipality was made fully aware of the risks that these transactions posed.


To some degree, this may reflect the S.E.C.’s focus on investors. Its record on this side of the ledger is better. For example, the commission took action against nine brokerage firms after one corner of the muni world, the market in auction-rate securities, blew up in 2008. The S.E.C. forced banks to buy back investors’ holdings.


The S.E.C. has also pursued some accusations of improprieties among underwriters. In 2009, J. P. Morgan Securities settled a case in which it was accused of making payments to friends of Jefferson County, Ala., commissioners in a scheme to win county business involving municipal bond offerings and derivatives agreements. In settling, J. P. Morgan agreed to pay $50 million to the county, and to forfeit more than $647 million in termination fees associated with the deal. Jefferson County has since filed for bankruptcy.


But cases where the agency has alleged unfair dealing on behalf of issuers during the credit boom are rare. One arose last year, when the S.E.C. sued Stifel, Nicolaus and the Royal Bank of Canada, contending that they sold unsuitably complex financial instruments to five school districts in Wisconsin. Royal Bank of Canada settled its case, paying $30.4 million. The Stifel case is pending.


Andrew Ang, a professor at Columbia Business School, says the S.E.C.’s reluctance to act on behalf of issuers may be a result of its odd position as a federal regulator trying to oversee municipalities that are under state jurisdiction. “You very quickly get into legal issues that go way beyond the S.E.C. and into jurisdiction between states and federal authorities,” he said. “The issue of fair dealing is one little dimension in a very big picture of gross inefficiency.”


IN an interview last week, Elaine C. Greenberg, chief of the S.E.C. enforcement division’s municipal securities and public pensions unit, said the commission was just as interested in protecting issuers as it was investors. “I don’t draw a distinction between protecting investors and protecting municipalities when they are in the role of investor,” Ms. Greenberg said.  “Consistent with the S.E.C.’s mandate of investor protection, we will pursue cases both where the investor is a holder of municipal securities and where the investor is itself a municipality.”