Municipal Bond Forum
Fear relieved
Q
I certainly hope you’re on target on how bad of an idea it would be to allow states to declare bankruptcy. I have a considerable amount of my retirement savings in Colorado munis and I love the tax-free returns, but I’m troubled by the focus on defaults. I have called my advisor and contacted Andrew Blum at FMSbonds in Denver — whom I have complete confidence in — and he puts my fears to rest by assuring me that my bonds are insured. But now I am hearing that the insuring agencies have no legs either. It’s scary and I am torn between selling out and going into a 1% CD or hanging in there. The main reason I am going to hold tight is that Colorado, where all my bonds are, seems to be in fairly good shape compared with other states.
A
James A. Klotz responds:
Thank you for your comments. Calming your fears is exactly what we tried to do by providing common sense reasons why municipal bankruptcy is an unacceptable option.
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