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THE CITY O F Attachment 4 q,EASANTON ~~~ ~~~ i~ ~~~ ~~~ 1 L~ ~S~4NTON© May 21, 2008 Mr. Robert Grossman Ms. Gail Sussman Mr. William Montrone Group Managing Director Group Managing Director Head U. S. Public Finance Public Finance U.S. Public Finance Dept Fitch Ratings Moody's Investors Service Standard & Poor's 33 Whitehall Street, 27`x' Fl. 250 Greenwich Street 55 Water Street New York, NY 10004 New York, NY 10007 New York, NY 10041 SUBJECT: Ending Double Standard in Ratings of Municipal and Corporate Bonds Dear Mr. Grossman, Ms. Sussman and Mr. Montrone: The current system of assigning credit ratings to bonds issued by governmental entities which provide essential services to the public leads to indefensible market discrimination against state and local municipal issuers. The rating agencies' own studies show that the likelihood of default by municipal borrowers is much lower than for corporate borrowers with similar ratings. Ratings should be based primarily on an evaluation of the likelihood investors will suffer a loss due to default. Unfortunately, for municipal bonds, they are not. This practice costs taxpayers enormous amounts of money that could be invested in public programs and infrastructure. The City Council of Pleasanton recently adopted a resolution (copy enclosed), urging your companies to end the double standard in the treatment of municipal and corporate bonds. The City Council urges you to treat taxpayers the same as corporations and rate municipal bonds based on the risk investor loss due to default. Finally, we urge you to do this by creating a unified, global rating approach that treats all issuers equally, thereby better serving taxpayers and investors. Thank you. Sincerely, David P. Culver Director of Finance P. O. Box 520, Pleasanton, CA 94566-0802 123 Main Street Finance Human Resources Information Services (925) 931-5400 (925) 931-5048 (925) 931-5083 Fax: 461-6855 Fax: 931-5488 Fax: 931-5476