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After Moody's reported a surge in "toxic" municipal debt (money owed to banks by municipalities) in China in summer, 2011, Bank of America Merrill Lynch economist Ting Lu deemed the assessment “too pessimistic," saying he disagreed with the assumptions and the math and the translation-of-terms used by the rating agency. Moody's had also estimated that "between 8% to 12% of loans extended by Chinese banks could eventually be classed as non-performing," according to a news report.[27]

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US backlash over S&P rating

By Johanna Kassel and Matt Kennard in New York


Three US municipalities have dropped Standard & Poor’s ratings of their local government investment funds in retaliation for the rating agency’s downgrade of US government debt to double A plus.

The move is a tangible sign that S&P’s business is suffering from a patriotic backlash in the US following its decision to strip the world’s biggest economy of its triple A credit rating for the first time.


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On this story
Lex Discredit rating
FT Alphaville City to S&P: drop dead
Fitch maintains US’s triple A rating
Chinese rating agency comes under fire
Lex S&P and the SEC

Last week, S&P downgraded the investment funds of the three US municipalities, the City of Los Angeles; Manatee County, Florida; and San Mateo County, California, from triple Af to double Af – the “f” signifying that the rating is on an investment fund – along with 11 other local investment funds.

“First of all, we didn’t agree with the downgrade of the US government,” said Dan Wolfson, finance director at the Manatee county clerk and controller. “And, of course, the ripple effect, because of our holding with US government debt, meant our pool rating followed.”

The downgrades of the municipalities were based on their “significant exposure” – greater than 50 per cent – to US Treasuries and US government agency securities, S&P said in a note following the decision. S&P rates 90 government investment pools. The three municipalities chose not to renew their contracts with S&P to rate the ­quality of their investment ­portfolios.

Mr Wolfson said Manatee County, whose investment fund was worth between $620m and $750m in 2010, was in talks about the possibility of being rated by another agency. “There’s no requirement for us to have our pool rated, we just decided to not renew the contract.”

Municipalities voluntarily commission ratings from rating agencies to allow transparency of their investments. Ratings also act as a benchmark to compare investment risk to known quantities, including public companies and government agencies. The ratings are based on “overall exposure to default risk”.

Palm Beach County Investment Portfolio, managed by the clerk and comptroller for the county, was one of the funds downgraded to double Af by S&P. The fund has an average value of $1.8bn and last year earned about $75m, Sharon Bock, clerk and comptroller for Palm Beach county, said.

Despite the downgrade, Ms Bock said there would be no immediate change in the composition of the portfolio, which has between 50 and 55 per cent of its funds invested in US government agencies, including mortgage-backed securities. She said the main responsibility of the fund was to the taxpayers and past performance also helped to dictate the direction of the fund, in addition to ratings.

The Florida county does not plan immediately to change rating agencies.

“We don’t ever want to make a knee-jerk reaction and we certainly are not going to do it now,” Ms Bock said. “We are going to evaluate S&P’s critical process and, when we see that criteria, we may decide to change rating agencies.”

Municipalities pay annual fees – Manatee County paid $16,000 – to have their portfolios examined for quality and rated.

“We really sought the rating to provide assurance and comfort to the county commissioners and the citizens, that the money and investment pool were being handled in the best manner possible,” Mr Wolfson said.

S&P downgraded the US credit rating from triple A, earlier this month. Both Fitch Ratings and Moody’s maintained their top ratings, but Moody’s downgraded its outlook on US government debt to negative. Mr Wolfson said he was not concerned about the quality of Manatee County’s investment fund.

Separately, S&P said in a report released on Thursday that The Federal Budget Control Act could have an effect on municipal credit quality. “In our opinion, the longer-term deficit reduction framework adopted as part of the BCA could undermine the already fragile economic recovery and complicate aspects of state and local government fiscal management,” it said in a note.

Quoted from DemocraticVoiceOfReason

The Renaissance of Schenectady  -- the county and the city and all of its towns and villages -- continues.

Quoted from senders

this also includes guaranteed pensions of public workers......remember the CAFR?

couple this with Public Authorities practically be autonomous

here we are

Quoted from TakingItBack

Well as youi know, nothing is guaranteed except death and taxes.  People are finding out that Pensions arent always guaranteed.  All legitimate non public teat sucking businesses and corporations stopped offering Pensions to there employees for a reason.  

Quoted from Madam X

MC1, save your typing fingers. He just spews that idiocy that even he doesn't believe to get attention. Google "oppositional defiant disorder" and get some idea of his childish affliction. You can't really debate a liar. Why bother?

Quoted from senders

we can only hope that Berlusconi doesn't move here....oh wait,,,,I think his cousins already are

Quoted from mikechristine1

You just can't write the words that downtown has done NOTHING AT ALL to relieve the homeowners of their financial burden and make the city a pleasant safe place to live; that is PROVEN by you REFUSING to move into the city.

Mike and Christine have a very nice life (not extravagant by any means), have a modest home, enjoyable careers, a loving relationship, both adults, self supporting, raising a family that does well in school, no mama's boys in this house, not living off the public dole, not living off relatives, and volunteering to those less fortunate, with hearts that go out to those stuck in the city.

By the way, you still have never answered the questions
1.   Is it proper to raise taxes on financially struggling homeowners with household incomes of $30,000 in order to exempt millionairess from paying taxes?
2.   As you claim to be a Catholic, tell us, would Jesus support taking money from the homeowners in the city and exempt the millionaires downtown from paying taxes?  

Quoted from Madam X

MC1, save your typing fingers. He just spews that idiocy that even he doesn't believe to get attention. Google "oppositional defiant disorder" and get some idea of his childish affliction. You can't really debate a liar. Why bother?

Quoted from bumblethru

Most don't really care nor pay attention to the 'troll(s)'....

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IV. Calculating the Tax Levy Limit
Each local government shall calculate the tax levy limit for the coming year as follows:
 First, determine the total amount of taxes levied, not collected, in the prior fiscal year.
 Property taxes levied by a town to fund the town budget under its taxing authority fall within the town’s tax levy limit.
 Property taxes levied by a town on behalf of another local government (e.g. fire district) pursuant to the taxing authority of that other local government fall within that other local government’s tax levy limit.
 Second, if a "tax base growth factor" has been reported to the local government by the Commissioner of Tax and Finance, the total amount of taxes levied for the prior year is to be multiplied by the growth factor.
 Third, add any PILOTs that were receivable in the base year. The total amount of PILOTs receivable is to be included in the calculation of the tax levy limit. No adjustment is permitted.
Fiscal Year beginning CPI-U period ends CPI-U released