Whitney vs. Marshall

Banking analyst and equity researcher Meredith Whitney was on CNBC this month describing Nevada’s economic situation as “terrible.”

Not many people in the state would have argued the point, but State Treasurer Kate Marshall did.

“If I take Nevada’s debt and if I add in the pension liability, and I add in the benefit liability, I’m still only at 8.6 percent. I can’t speak for Ms. Whitney … but I do have to say it would be nice if she did a little homework, drilled down a little bit into what those numbers are,” Marshall said in her own CNBC appearance on June 24.

“Basically what we think happened is she [Whitney] took a Pew report, which looked at the total pension plan,” Marshall went on. “But the state of Nevada is one out of 180 employers that participate in that pension plan. We only represent about one-sixteenth of that plan, and in addition our state employees pay half.”

Whitney has not been very popular on Wall Street for her analyses dissing the stability of municipal bonds that support many states. After her appearance on CNBC this month, Portfolio.com reported, “Last year, Whitney called out California, New Jersey and Illinois as the worst offenders when it came to being overleveraged on the bond market. Now, she’s also pointing a finger at states like Nevada, where she claims half of the budget is absorbed by debt servicing, and Michigan, where paying back debt absorbs 40 percent. In Arizona, California, Connecticut, Ohio and Illinois, the amount of money the state must pay to keep up with what it has borrowed exceeds 20 percent, her report says.”

In her CNBC appearance, Marshall said, “It’s as if she [Whitney] said, ‘Well, a family of four makes $100,000 a year, and they buy a house for $200,000. Oh, my goodness, half their income is half the cost of that house. They can’t possibly afford it.’ But you and I know that’s not [an] apples-to-apples [comparison].”