The issue of CDOs, tranching and credit ratings gets pretty complex. There are some buyers who are upset because of credit rating agencies' overly rosy ratings for CDOs that included lots of subprime loan-based securities. Ohio attorney general Marc Dann is building a case against the raters. According to Fortune, Ohio is very exposed: The Ohio Police & Fire Pension Fund has roughly 7 percent of its portfolio in asset backed bonds. The pensions were drawn by the AAA ratings and feel let down by ratings. The raters say this is drivel. Whether Dann's views have merit or not, the issue is clouding things for agencies. Many pensions can only buy investment grade issues. In their view, this stuff should have been rated a lot lower. Of course, no one defaulted yet. The raters seem to be acting.  Moody's has downgraded a slew of issues and put even more on their watch list.

For more:
- here's the article from Fortune