California Treasurer Bill Lockyer continued his rampage against the New York bond rating agencies, telling CNBC that California will pay "about $4 billion more" in debt service payments because the rating agencies use faulty guidelines to assess the state's debt.
“[California is] going to pay about $4 billion more than we ought to because we’re rated A basically rather than AAA as we probably should be rated,” Lockyer said in an exclusive interview on CNBC"s Power Lunch.
The bond rating agencies—Moody's, Standard & Poor's and Fitch—had no immediate comment.
The three agencies have come under tremendous scrutiny in recent months for missing the subprime debacle by rating many collateralized debt obligations and other structured-finance securities at the gold-plated Triple-A level, even though these bonds were backed by faulty subprime mortgages that went into default, thus eroding the value the securities.