Attorney General Richard Blumenthal, testifying today before a congressional committee in Washington, D.C., said Wall Street is imposing a “secret tax” on states, cities and school districts across this nation through a dual bond rating system.
Blumenthal has an ongoing investigation into rating agencies’ use of a dual system to rate bonds – one standard for government-issued bonds and another, more lenient standard for the corporate world.
Blumenthal, personally testifying before the U.S. House Committee on Financial Services, said the dual system should be banned.
“Wall Street profits, Main Street pays,” Blumenthal said in a statement. “The current dual system of rating bonds issued by state and local governments is dangerously misleading and misguided. It imposes a secret Wall Street tax on states, cities and school districts across this nation. Rating agencies admit that municipal bonds frequently receive substantially lower credit ratings than corporate bonds with the same or worse rates of default. This dual rating system costs municipalities in Connecticut and around the country millions of dollars in unnecessary interest and fees every year.”
