House Financial Services Committee Chairman Barney Frank (D-Mass.) said that he plans to propose legislation today that could force bond-rating companies to take a more positive stance toward state and municipal bonds, the Wall Street Journal reported today. The $2.5 trillion municipal-bond market is currently rated on a risk scale that is generally tougher than the one used for corporate bonds or national-government debt. Moody’s has found that investment-grade corporate bonds between 1970 and 2000 had a 10-year default rate of about 2.3 percent, far higher than the 0.03 percent default rate of investment-grade munis. Muni-bond issuers and politicians across the country have argued that the tougher ratings treatment is basically a hidden tax on cities, states and the public. Bond-rating firms, however, may argue that the bill comes too close to legislating their methodologies, something that Congress has been reluctant to do in the past.