Feds may not guarantee muni bonds in Katrina's wake

Looks like the Bush Administration may deal a serious blow to what many investment bankers thought would be a great source of post-Katrina rebuilding funds: the bond market. US Treasury Secretary John Snow has said that federal guarantees for municipal debt in the region would be "highly undesirable." About $8.1 billion of local and municipal bonds have already been affected by Katrina. Without a federal guarantee, those bonds might end up in default. Issuing unrated bonds would be more expensive and bring in more speculators.

> Here's a Forbes article.