Bipartisanship Fail: Illinois Government Begs Ratings Agencies to Cover for Them

Even in the face of getting their credit rated as junk bonds, Illinois can’t produce enough bipartisanship to solve crisis.

The media extolls an attempt at bipartisanship on the part of the Illinois House of Representatives, even though it ended in failure. As a result, the House Speaker promised to plead with the ratings agencies to not downgrade their bonds to junk.

Arguably, this is tantamount to asking the ratings agencies to commit fraud. I remember, after the financial crisis, the bond ratings agencies were highly criticized for giving high ratings to the financial instrument that hid the bad mortgages. The ratings agencies are supposed to warn investors of danger, not do special favors for politicians.

Reuters reports, “Illinois budget uncertainty extends into new fiscal year.

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A rare sign of bipartisanship in the Illinois House on Friday fueled hopes of movement toward a spending deal, but a consensus failed to emerge in time to stop the state from heading into a third-straight fiscal year without a budget.

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The record stalemate between Republican Governor Bruce Rauner and Democrats who control the legislature has put the third-most populous U.S. state’s credit rating in peril of dropping to junk.

[…]

After a 90-25 test vote on the spending bill, House Speaker Michael Madigan said his legislative chamber will return to session on Saturday, and he sent letters to major bond-rating agencies imploring them not to downgrade the state’s credit ratings to junk as budget talks continue.

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