Warren Buffett and the Case for Eliminating Municipal Bond Insurance
Why does municipal bond insurance exist? After all, default rates are incredibly low, on the order of 0.1%, much lower than on corporate issues. Not surprisingly, this low-default insurance business has been highly profitable, at least until recently, for incumbents.
Now, however, we have Warren Buffett wanting a piece of the (broken) action. Should he get it? A provocative piece in the upcoming issue of Portfolio argues nyet. Not so much to Warren, as to the whole idea of muni-bond…
