Bloomberg News

Meredith Whitney Plans to Write Book on Muni Market, NYT Says

February 22, 2012

Feb. 21 (Bloomberg) -- Meredith Whitney, the banking analyst whose prediction of “hundreds of billions of dollars” of municipal-bond defaults last year didn’t prove true, plans to write a book about the market, according to the New York Times.

The book, to be titled “Downgraded: Why the Next Economic Crisis Will Be Local,” is set to be published by Portfolio, a Penguin Group imprint, in November, the Times said today, citing a statement from the company.

Whitney, 42, gained prominence after her 2007 prediction that Citigroup Inc. would cut its dividend because of mortgage- related losses proved correct in 2008. Her recommendation to sell bank stocks before the credit crisis hit with full force propelled her to fame.

The December 2010 call on municipal bonds, during an appearance on CBS Corp.’s “60 Minutes” television show in which she said “50 to 100 sizable defaults” would occur, helped spark the withdrawal of $23 billion from tax-exempt municipal-bond funds from January 2011 through April 2011, according to Investment Company Institute data.

Analysts including Tom Doe of Municipal Market Advisors and Richard Larkin of Herbert J. Sims & Co. criticized the prediction, noting that debt service is a relatively small portion of most government budgets and that states and cities were taking steps to cut spending, raise taxes and address underfunded pensions.

Defaults on municipal bonds involving missed payments totaled $2.6 billion out of $3.7 trillion of outstanding municipal bonds.

Portfolio didn’t respond to an e-mail seeking information about Whitney’s book deal.

--Editors: Ted Bunker, Mike Millard.

To contact the reporter on this story: Martin Z. Braun in New York at mbraun6@bloomberg.net

To contact the editor responsible for this story: William Glasgall at wglasgall@bloomberg.net


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