Wow. So the typical knock on the ratings agencies is that they’ve been too lenient with ratings, giving every piece of polished trash a AAA-rating.
But Barney Frank the powerful Congressman is lashing out at Moody’s for putting all muni bonds on negative outlook:
MarketWatch: Saying he was “troubled” by the Moody’s action, which could make it “more expensive to borrow funds for infrastructure improvements,” the influential congressman said he planned a hearing in early May on treatment for municipalities’ general obligation bonds.
What!? A hearing for issuing a downgrade?
And complaining that the downgrade could increase the cost of borrowing. That’s, like, kinda the point Barney! Municipalities are less creditworthy than they used to be — a combination of profligate spending and vanishing revenue — and lenders would be wise to approach them with a caution.
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