Prominent analyst stands by muni-bond default call

Meredith Whitney, the financial analyst whose prescience on the 2008 Wall Street crisis made her a star, is holding firm on her latest controversial call: that we'll see a wave of defaults by cities and towns on their municipal bond obligations.

"When you have the first group of defaults, you will see indiscriminate selling that would be a buying opportunity for some," Whitney told CNBC, predicting a stampede out of the market. "Because there has been such complacency in the market and muni investors have been talked down to for so long — 'There's nothing to worry about, there's nothing to worry about' — they'll just fly."

Last month, Whitney told CBS News' "60 Minutes" that the finances of local governments around the country -- weighed down by pension obligations and decreased revenue from the downturn -- are so shaky that she expected to see 50 to 100 "significant" muni-bond defaults in 2011, totaling "hundreds of billions" of dollars. That prediction received widespread criticism as overly dire.

Whitney gained attention for accurately predicting that Citigroup's exposure to the sub-prime mortgage market would present major problems for the company. The firm ultimately needed a multibillion-dollar government rescue.

(Photo of Whitney: AP/Mark Lennihan)