Whitney has truly upset a major player somewhere. She is doing the correct thing for her own career not to appear before the hearing. If Gasparino is correct, this investigation is to a large degree about getting Whitney, more than it is an examination of the muni market. If they subpoena her, she should take the Fifth. Remember, Martha Stewart, Meredith.
For the record, people that I talk to who are a lot more influential than Whitney, hold the same beliefs about the municipal markets. They aren't talking publicly because they no the heat that would come down from such a warning--the kind of heat Whitney is now experiencing. But their fears about the muni market are just as strong, though perhaps their view on the timing of the developments is a little different. Further, in a very under-reported speech, Fed chairman Bernanke on October of last year came as close as a Fed chairman is ever going to come in warning about a potential municipal bond crisis (My emphasis):
....in the United States, governments at all levels are grappling not only with the near-term effects of economic weakness, but also with the longer-run pressures that will be generated by the need to provide health care and retirement security to an aging population. There is no way around it--meeting these challenges will require policymakers and the public to make some very difficult decisions and to accept some sacrifices. But history makes clear that countries that continually spend beyond their means suffer slower growth in incomes and living standards and are prone to greater economic and financial instability.
Courageously, Whitney has put out a clear warning that may save many who have, because of her warning, sold their muni bonds. However, somebody else appears just as determined to move the chess pieces to crush Whitney for her warning, and silence her. Welcome to 21st century America.