The concern is that this could be the tip of the iceberg, adds Karen Finerman. In other words, there could be a whole pile of defaults and a large number of claims against companies like ABK who insure these municipal bonds.
It could be a huge pool of potential defaults, Finerman says. And I want to know who securitized them? In the end, all of this could very well lead back to the investment banks.
Consequently, I think the trade is to be short Lehman she adds.
Or you could short Washington Mutual adds Pete Najarian.
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Trader disclosure: On Jan 8, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (YHOO), (SWY), (INTC); Najarian Owns (BIIB), (MCD), (MSFT); Najarian Owns (AAPL) Options, (CFC) Options, (VLO) Options, (YHOO) Options; Najarian Is Short (WM) Through Options; Finerman's Firm Owns (CROX), (DVA), (GS), (YHOO), (DSW); Finerman's Firm Is Short (IJR), (IYR), (IWM), (SPY), (SPG), (TCO); Finerman's Firm Owns Russell 2000 Puts; Finerman's Firm Owns S&P 500 Puts; Finerman's Firm Owns (MDY) Puts And Is Short (MDY); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; Finerman's Firm Owns (MSFT) Options