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Lindley Estes is a business writer for The Free Lance-Star and This blog is on Fredericksburg-area business. Send an e-mail to Lindley Estes.

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Buffett banking on municipal bonds

WARREN BUFFETT is betting big on state and local governments.

Bloomberg reported this week that Buffett’s Berkshire Hathaway doubled its municipal bond holdings in the nine months ending March 31. The moves came amid huge swings in the value of "munis" as investors feared a wave of defaults from state and local governments.

Buffett apparently decided that the fears were overblown. Berkshire increased its investment in debt issued by state and local governments to $4.05 billion as of March 31 from $2.05 billion on June 30, 2008. Berkshire added $1.1 billion to the bet in last year’s third quarter and $985 million in the first three months of 2009, Bloomberg reports.

Berkshire also recently started a business, Berkshire Hathaway Assurance Corp., to insure against possible default by the cities and states that issue the bonds.

Click here for this week’s Business Browser column.