Legislation proposed to create equal footing on ratings for municipal, corporate issuers

By Cristal Cody

Springdale, Ark., June 20 - House lawmakers unveiled legislation Friday that would mandate municipal bonds receive the same ratings standards as corporations, a policy that would lower borrowing costs for most government issuers.

The proposed legislation by Massachusetts Democrats Richard Neal and Barney Frank will be voted on during the week of June 23 in the House Financial Services Committee, of which Frank is the chairman.

The potential law follows a growing demand from local and state governments for a more fair ratings system that could eliminate the need for bond insurance.

California Treasurer Bill Lockyer said Friday in a letter sent to Frank that he was in complete support of the legislation.

Lockyer said the current system has forced taxpayers across the nation to spend hundreds of millions of dollars every year on higher interest rates and bond insurance premiums.

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