Next stop on bailout train : State & Local Government Muni Bonds

There have been no shortage of people with their hands out to the federal government over the past year.  State and local governments are no exception.

Now they're back for more.

The National League of Cities recently asked the Treasury Department for an interest-free loan for $5 billion (try that at your local bank).  What will these big-city mayors do with this cash?  They would like to create a insurance policy for all the debt that cities have been racking up.

Let's put aside for one moment that these cities have consistently failed to reign in costs, which has led to their unfunded liabilities and exorbitant debt levels.  Let's even put aside the chutzpah they have to ask for an interest free loan from taxpayers.  Let's instead focus on the idea of insuring municipal bond debt.