Alexandra Lebenthal has a message for Meredith Whitney: stick to the banks and leave muni bond markets to the experts.
Lebenthal, who is the daughter of muni bond legend Jim Lebenthal and a so-called Muni Queen herself, is fed up with Whitney’s gloomy predictions of a wave of defaults by states, cities, towns and borrowers, Reuters reports.
Lebenthal thinks Whitney’s “numbers are way off,” and like PIMCO’s Bill Gross, doesn’t think states will default, in part because the federal goverment would never allow them to.
“I don’t dispute [Whitney’s] knowledge of the investment banks, but she is not a municipal bond expert,” Lebenthal said. “I would put any muni analyst in a room with her — on TV, outside in the school yard — and see who comes out ahead.”
For one thing, bond holders have long enjoyed strong protection in the courts, she said, even when New York City teetered in 1975. They come first in line ahead of police, fire, trash collection and other obligations, she said.
Of course Lebenthal isn’t the first to slam Whitney’s forecasts, and we doubt she’ll be the last.