March 28 (Bloomberg) -- Billionaire Warren Buffett's new bond insurer may not get any business from California, the largest U.S. municipal debt issuer.
California Treasurer Bill Lockyer is leading more than a dozen state and local governments that say bond ratings exaggerate the risk of default, pushing up interest costs and forcing issuers to buy unneeded insurance. Lockyer said in a March 26 interview his state will shun Berkshire Hathaway Inc.'s venture because Buffett's company supports the current ratings.
``It's unfair to taxpayers,'' said Lockyer, who estimates the present system may cost his state an extra $5 billion over the next three decades. ``I hope Mr. Buffett will rethink that viewpoint. I don't intend to do any business with his firm.''
Berkshire Hathaway Assurance was created in December after state regulators sought to help governments get coverage when losses jeopardized bond insurers MBIA Inc. and Ambac Financial Group Inc. The turmoil spread to auction-rate markets, where average debt costs almost doubled from January to more than 6.5 percent as of March 19. Instead of embracing Buffett's company, some bond issuers began asking why they need insurance at all...