Bernanke Rejects Bailing Out State and Local Governments; A Look at Meredith Whitney's Municipal Bond Call

"It's exceptionally rare I agree with what Bernanke has to say. This is one of those rare times. Please consider Bernanke Rejects Bailouts

"We have no expectation or intention to get involved in state and local finance," Mr. Bernanke said in testimony before the Senate Budget Committee. The states, he said later, "should not expect loans from the Fed."

The $2.9 trillion municipal-bond market has been stung recently by worries that some cash-strapped cities or states won't be able to pay off or roll over debt. Costs have risen broadly for municipal borrowers. The market also faces challenges from the expiration of the Build America Bonds program, which helped cities and states borrow $165 billion at interest rates held down by federal subsidies..."

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