Connecticut’s treasurer called the state’s $900,000 settlement with the three rating agencies a major step forward.
“The credit rating system of the past was biased and unfair,” Denise Nappier said after Connecticut settled lawsuits with Moody’s Investors Service, Fitch Ratings and Standard & Poor’s.
Nappier has long called for rating agencies to recalibrate municipal bond ratings to a single scale, which she said would help level the playing field between corporate and government issuers.
After lobbying from state treasurers, Moody’s and Fitch began using single rating scales, and Standard & Poor’s followed in the wake of the federal Dodd-Frank Act.
Standard & Poor’s maintained that it used a uniform scale across all major credit sectors.
The Dodd-Frank Act, adopted after Connecticut filed the suit, requires rating agencies to apply ratings consistently across types of securities. The $900,000 will be applied as credits against the costs of future ratings.