The good Times story on small-town Tennessee losing big on derivatives is getting quick results.

The state is planning “revolutionary” regulation to pretty much prohibit municipalities from using derivatives at all, the Times reports today:

The comptroller, Justin P. Wilson, said Thursday that his recommended changes would prohibit small cities and counties from using sophisticated derivatives, which have crashed, causing interest payments to increase by as much as 500 percent and putting a strain on local governments.

The Times’s story three weeks ago reported on how small municipalities in Tennessee are getting slammed by complex derivative investments they made to help save money. The firm Morgan Keegan played a huge, conflict-ridden role in selling the derivatives.

The Tennessee proposal would try to eliminate conflicts of interest, as well:

He said other changes would involve greater disclosure of fees associated with bond transactions as well as a requirement that a single firm “only play one role” in each transaction.

“No firm will be allowed to act on multiple sides of a transaction,” Mr. Wilson said.

That’s common sense. And it’s a feather in the Times’s cap.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.