Billionaire investor Warren Buffett and banking analyst Meredith Whitney are "out of their league" when it comes to the municipal bonds market, according to Richard Larkin, senior vice president and director of credit analysis at investment bank Herbert J. Sims.
Whitney has come under fire for her predictions of a wave of defaults in municipalities, causing a run from the muni bond market.
"When it comes to municipal bond defaults, both Warren Buffett and Meredith Whitney are not only dead wrong, they are out of their league," Larkin said in notes sent to CNBC before an on-air interview.
"There could be 50 to 100 defaults in 2011; there could be more. They will not be major or 'sizeable' defaults, and they will not total hundreds of billions of dollars," he wrote.
"Defaults are not likely to exceed $20 billion, which is less than 1 percent of all municipal bonds outstanding," Larkin also said.
Whitney recently defended her call, saying it was based on the shaky state of local finance and a "daisy chain" of financing from the federal to state to local governments that would not hold up anymore.
But Larkin said actions at state level and local control boards will do a lot to prevent wide scale defaults, and most state and local pension funds are "years away from being unable to pay pensioners."
"I don't believe there's going to be a federal bailout of states and cities … all this talk about a federal bailout, I don't buy it," Larkin told CNBC in an interview.
"You have to remember these are governments, they don't go out of business, they have to continue in business, they have to continue to operate, they have to continue to provide services."