Now it's Moody's turn to get downgraded. The international rating agency hit the headlines recently for adjusting the ratings of other corporations. But this time, Moody's short-term A-1 debt rating may be cut by Standard & Poor's. This is the result of increased risk stemming from the U.S. financial overhaul bill.
The legislation will allow investors to sue rating companies. They need to show that the company knowingly or recklessly failed to conduct a reasonable investigation of facts in assigning a credit grade. The final bill may also remove references to nationally recognized statistical rating organizations, reducing the demand for ratings.