BrianGarst.com

Struggling states prep subsidized bond sales

On Tuesday, Moody’s Investors Service said it had assigned a negative outlook to all U.S. local government ratings, the first time it assigned an outlook to the sector, which contains 52,000 cities, counties and school districts.

It cited “significant fiscal challenges” facing local governments because of the housing market collapse, financial market upset and recession.

…But House Financial Services Committee Chairman Barney Frank, D-Mass., took a different tack.

Saying he was “troubled” by the Moody’s action, which could make it “more expensive to borrow funds for infrastructure improvements,” the influential congressman said he planned a hearing in early May on treatment for municipalities’ general obligation bonds.

Barney Frank is up to his old, dirty tricks again.  Moody’s has done nothing but recognize the reality that government is a bad investment.  These municipalities are burdened by declining tax revenues and overly generous public sector pension plans that they cannot support and which unions won’t let them renegotiate.

So Moody’s comes out and says what everyone knows, and now Barney Frank threatens them with a “hearing,” the typical first step in a government witch hunt.  If Barney Frank is upset that it’s more expensive for government to borrow funds, he has no one to blame but his big spending ideological colleagues.

Barney Frank