The ratings eligibility criteria for the Federal Reserve's $1 trillion Term Asset-Backed Securities Loan Facility unduly favors the three "major" credit rating agencies whose mistakes helped fueled the financial crisis, Connecticut Attorney General Richard Blumenthal complained in a letter sent yesterday to Fed chairman Ben Bernanke.

Because the three major rating agencies - Standard & Poor's, Moody's Investors Service, and Fitch Ratings - are the only nationally recognized statistical rating organizations that meet TALF eligibility criteria, the Fed's requirements effectively shut out the major NRSROs' competitors from as much as $400 million in possible fees, Blumenthal said in a statement, announcing he plans to investigate the matter.

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