Low costs and index funds have helped
make Vanguard the nation’s largest mutual
fund family.
Robert L. Augenblick
Tax-Exempt Funds
For many years, people in the fund industry and in state and local governments
expressed a desire to have funds invest in
tax-exempt bonds and pass the tax-free
interest on to fund shareholders. However, tax law treated all dividends paid by
funds as taxable. Moreover, many important members of Congress questioned the
wisdom of the underlying tax exemption
and did not want it extended to fund
shareholders. Finally, interest rates tended
to be low, so that it was not practical to
operate tax-exempt funds. When interest
rates climbed in the late 1960s and 1970s,
the proposition became viable.
Bob Augenblick had attended Harvard
Law School, served in the Office of Strategic
Services during World War II, and practiced law in New York City. He joined the
Investment Company Institute in 1962 as
general counsel, and became its president.
In 1976, he made enactment of tax-exempt
fund legislation his final goal before his
upcoming retirement. He assembled a
team consisting of himself; Ed Cohen, the
Institute’s long-time outside tax counsel;
Ramsay Potts, the Institute’s outside legislative counsel; and Donald Petrie, an
attorney and investment banker retained
by the Dreyfus fund group. Despite the
opposition of the chairman of the House
Ways and Means Committee, Bob and his
team succeeded in having