July 30, 2008 Connecticut sues three major credit card companies Play video

(Brian Burnell, NECN: Thomaston, CT) - The State of Connecticut is suing three of the nation's leading credit rating firms saying they give unfair ratings to cities and towns. The lower ratings mean higher interest rates and insurance premiums that cost taxpayers millions.

This reservoir provides water for the city of Waterbury, Connecticut. It has been drained as part of a 4-million dollar improvement project. Waterbury floated bonds to pay for this and the interest the city must pay on those bonds is fairly high because of the city's credit rating. If it were better the interest rate would be lower and the city would not have to pay for insurance on the bonds. Connecticut's attorney general is suing the 3 major credit rating agencies...Moody's corporation... Fitch, incorporated... and Mcgraw-Hill, parent of Standard and Poor's. He says the agencies give artificially low ratings to municipalities and calls the practice. Richard Blumenthal, D-CT Attorney General: "A secret tax imposed by Wall Street on Main Street. It has the effect of exacting, literally, billions of dollars from American taxpayers across the country."