The two items in The Bond Buyer in recent months considered a widely reported phenomenon. "Adverse selection" by a number of monoline insurers in guaranteeing collateralized debt obligations of subprime mortgage CDOs has destabilized the tax-exempt bond market, despite the distinction between structured finance and traditional municipal finance.

On June 6, there was a detailed front-page article about monoline insurance in the municipal bond market: "MBIA, Ambac Lowered: S&P Drops Both to AA, Sees Inflexibility." Previously, on March 10, a commentary by myself and Ned Regan addressed a related topic in the article: "Surety for Munis: Good, and Good for Pension Funds."

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