It was not just incompetence that caused Moody's to misunderstand the quality of the issues it was rating. Moody's and the other bond-rating agencies were getting paid by the banks whose assets that they were rating. The bond-rating agencies knew that these companies wanted investment grade ratings for their issues. As one examiner for Standard and Poor's said in an email, they would give investment grade ratings to products "structured by cows".

This record must be kept in mind when considering the possibility of a Moody's downgrade of US government debt. It is no secret that many on Wall Street would love to see social security and Medicare cut back or even privatised. Investment banker Peter Peterson has even committed $1bn toward promoting this agenda. When Moody's threatens to downgrade US government debt, or if it actually does so, it may reflect its actual assessment of the creditworthiness of the US government or it could be a reflection of the Wall Street agenda to cut back these key public programmes.

There is one way in which the public can better recognise what Moody's motivations may be. All banks, including giants like Citigroup and Goldman Sachs, hold huge amounts of US government debt. They are also reliant on the US government for all sorts of reasons, including potential bailouts. If the US government were to default on its debts, then it would almost certainly wipe out every major bank in the country. There is no plausible scenario in which the US government defaults on its debts and the banks will still be able to make good on their debt payments.

This means that if Moody's were to downgrade the government's debt, to be consistent it must also downgrade the debt of Citigroup, Goldman Sachs and the other big banks. If Moody's downgrades the government's debt, without downgrading the debt of the big banks – or even threatens to downgrade the government's debt without also threatening to downgrade the debt of the big banks – then it seems more likely that it could be acting in pursuit of Wall Street's political agenda than presenting its best assessment of the creditworthiness of the US government.

It is unfortunate that we have to suspect a major credit rating agency of such dishonesty, but given its track record, serious people have no choice. To paraphrase an old George Bernard Shaw joke, we already know about the character of the bond-rating agencies, we are only asking if they are prostituting themselves now.

http://www.guardian.co.uk/commentisfree/cifamerica/2010/mar/23/us-debt-rating