Frank Statement on Moody’s Proposal to Eliminate Dual Rating Scale for Municipal Bonds

Washington, DC - House Financial Services Committee Chairman released the following statement on Moody’s proposal today to eliminate its dual rating scale for municipal bonds:

            “I am pleased that Moody’s has proposed that they will eliminate the separate rating scale for municipal bonds.  This is a long overdue acknowledgement that overwhelmingly safe municipal bonds do not deserve the punitive treatment they have received under a separate rating scale.  As Moody’s itself acknowledged at the hearing in March, between 1970 and 2006 a period where records are complete, there was only one default on a general obligation bond, a far better record than for corporate bonds, and even in that default case no investor funds were lost.   It is time for municipal bond issuers to receive proper credit for the virtual lack of any loss on general obligation bonds.”