Attorney General Richard Blumenthal says the second of three New York investing ratings agencies sued by Connecticut taxpayers has agreed to changes that will save the state’s municipal taxpayers millions in interest payments.
Fitch Ratings agreed to overhaul and upgrade its credit ratings as a result of Blumenthal’s pending two-year-old lawsuit against three credit rating agencies, the attorney general said Monday.
“Facing our legal action, the credit rating agencies are beginning to repeal their secret Wall Street tax on Main Street — just as we demanded they do,” Blumenthal said Monday in a statement. “This news is critical as nearly every city and town in Connecticut faces devastating budget choices, including teacher layoffs and cutting essential services.
“This widespread ratings upgrade will save Connecticut cities and towns millions in completely unnecessary interest payments in the future — and should have happened long ago — but we are continuing this fight for money back.
In March, Moody’s Investors Service announced a similar overhaul to level the playing field between public and private debt issuers. Moody’s settlement plan will be implemented over the next few weeks.
McGraw-Hill Cos., parent of the third ratings agency Standard & Poor’s Corp., has not yet reached a similar agreement, Blumenthal said.
In a separate pending lawsuit filed in March against Moody’s and S&P, Blumenthal alleges that both knowingly assigned tainted credit ratings to risky investments backed by sub-prime loans. Blumenthal alleges that these practices enabled the worst economic downturn in the nation since The Great Depression.
