Moody’s, Fitch and S&P allegedly gave cities low ratings that cost taxpayers millions in bond insurance
Connecticut Attorney General Richard Blumenthal said his office is suing three national credit rating agencies for allegedly giving municipalities artificially low credit ratings.
Blumenthal's lawsuit named Moody's, Fitch, and McGraw-Hill (parent company of Standard & Poor's).
The lawsuit is part of an ongoing investigation into possible antitrust violations by credit rating agencies and bond insurers.
“The lawsuit is part of an ongoing investigation into possible antitrust violations by credit rating agencies and bond insurers.
Blumenthal said all three agencies gave artificially low ratings to bonds issued by states and other public entities. As a result of these low ratings, Connecticut's cities spent millions of dollars to purchase bond insurance to improve their credit rating.
Blumenthal said. "Connecticut's cities and school districts have been forced to spend millions of dollars, unconscionably and unnecessarily, on bond insurance premiums and higher interest rates as a result of deceptive and deflated credit ratings. Their debt was rated much lower than corporate debt despite their much lower risk of default and higher credit worthiness.