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Call for investigation into credit rating drop

Published 08/08 2013 11:03AM

Updated 08/08 2013 11:07AM

SPRINGFIELD -- Last month a Chicago business group said it lobbied credit rating agencies to lower the state's rating. Now that group denies any involvement. Unions and other groups are asking for an investigation to see if there was any foul play.

The Civic Committee's president says he just misspoke. In March, Ty Fehner said the Civic Committee talked to each of the big rating agencies, telling them to downgrade the state, otherwise it would take lawmakers longer to fix pension systems. Now, Fehner admits he said all that, but didn't really mean it.

It's making critics even more suspicious, but experts say the rating agencies are professionals and should be trusted to make the right call. Dyanne Ferk, of UIS, says even if the Civic Committee did lobby the agencies, it probably had nothing to do with the downgrades since Illinois really does have pretty bad finances.

Still, union groups are worried money from higher interest is going into someone's pocket so they still want to get to the bottom of this. There are several factors behind the reluctance to buy Illinois' bonds which led to the lower credit rating.

Some investment funds and trusts have rules preventing them from buying bonds approaching "junk" bond status, as Illinois is. Many investors don't want any names in their portfolio making negative headlines like Illinois.

In the past 50-years, just three states, California, Louisiana and Massachusetts, have had investment ratings as low as Illinois.

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