The original business for monoliner insurers was to insure government bonds, which were rarely rated at AAA by the agencies, even though they were at least as safe as AAA corporate bonds, so they would buy insurance, because the interest rate savings would more than pay for the insurance.

I’ve always seen this as self dealing by Wall Street. The ratings agencies set about screwing the taxpayers for the benefit of other folks, whether they be the monoliners or the investors who would get more interest.

Because of the increases scrutiny of ratings agency, there has been pressure to change this, and now Moody’s has announced that it will adopt the same ratings for Munis as it uses for corporate bonds.

About bloody time.