Mysterious Moody’s Move

by Roger Koppl

The Christian Science Monitor reports that Moody’s is considering downgrading US government debt.  (HT: Mario Rizzo)   Is that a credible threat?  Moody’s is one of ten “Nationally Recognized Statistical Rating Organizations” (NRSRO) officially recognized by the SEC.  Moody’s, S&P, and Fitch are the big three and do most of the rating.  Would they downgrade the same entity that ensures their continued monopoly power?  Why would they make such a threat in the first place?   What is the public choice explanation for Moody’s (empty?) threat?