Bernanke Makes It As Clear As A Bell….No State Bailouts
Posted By thestatedtruth.com on January 7, 2011
Let’s call a spade, a spade. Seriously….this is a “HOT POTATO” to the tenth degree!
Federal Reserve Chairman Ben Bernanke on Friday ruled out a central bank bailout of state and local governments hung with big municipal debt burdens, saying the Fed had limited legal authority to help. Bernanke: If municipal defaults do become a problem, it would be in Congress’s hands, not his… “This is really a political, fiscal issue.”   Â
“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.”
Costs have risen broadly for municipal borrowers. The muni 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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