New York Governor Eliot Spitzer warned at a House subcommittee hearing on financial services that a financial tsunami is looming if the federal and state agencies do not take action to bail out municipal bond insurers. The insurers risk losing their AAA ratings because of the decline in value of investments in the sub-prime mortgage market.
The House panel addressed the causes and effects of bond insurer ratings downgrades and the spillover effect on the financial services industry.