Municipalities to be rated like corporations
Naked Capitalism had a post about this Barney Frank guy who was threatening to intervene if the rating agencies didn't quit their discriminatory rating of the municipalities.
The way the ratings work right now a BBB bond is probably a better credit risk than an AA corporation.
Well, Naked Capitalism is reporting that the rating agencies are responding already. Apparently Moody's will rate municipal debt on the same scale as corporations. The lower rating system for the municipalities has increased demand for insurance. Investors are not as likely to require insurance for a AAA municipality.
So, the profitable side of the municipal issurers is so dead, first directly competing with Warren Buffet, and now, lowering demand because of being force to correct basically a corrupt rating system.