Frank Statement on Moody’s Negative Outlook on Municipalities

Washington, DC - House Financial Services Committee Chairman Barney Frank (D-MA) today issued the following statement in response to the negative outlook assigned by Moody’s Investors Service to the creditworthiness of America’s local governments:

 “I am troubled by the action of Moody’s Investors Service to issue a negative outlook across the board on America’s municipalities, which could raise the interest rates on cities and towns making it more expensive to borrow funds for infrastructure improvements. Today’s action could result in an unjustifiable burden on local governments, and this may have the unintended consequence of undercutting the stimulative effect of the economic recovery package. Interest rates on full faith and credit general obligation bonds are already too high and there is not demonstrated record of default.  The House Financial Services Committee will be holding a hearing in early May to explore the unfair treatment of full faith and credit general obligation bonds.”

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