Used to be, companies and state and local governments could just issue bonds. You know, written deals that said "You give me cash, I promise to pay it back, with interest over the next umpteen years." If the bond issuer seemed solvent, people bought the bonds. If the issuer was unknown or had a bad rep, the bonds didn't sell.
Then Congress got into the act. To issue bonds now, the issuer must get a rating agency like Standard & Poor or Moody's to "rate" the bonds. You know AAA or ABA or PUREJUNK. This was supposed to "protect" investors from unscrupulous junk bond dealers. Trouble is, the ratings agencies are less scrupulous than the junk bonders. The ratings agencies happily rated sub prime mortgage backed securities AAA. The defaults on AAA rated sub prime bonds caused Great Depression 2.0
Needless to say, this is pure gravy for the ratings agencies which now get a cut on every bond issued. The issuers have to pay the agencies for the rating. Needless to say, the issuers shop around for the best rating. If Moody's won't give me AAA maybe Standard and Poor's will.
It's welfare for Wall St.
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