It's no secret that credit ratings agencies rate municipal and corporate debt differently. Moody's has admitted as much. Exactly why they do this vexes some--including Connecticut state attorney general Ralph Blumenthal. He has sued Standard & Poor's, Moody's and Fitch, charging them with unfair practices that cost municipalities millions in insurance and interest. He says the raters earn lucrative fees from bond insurers that sell to municipalities, which can then borrow at lower rates. The raters intend to fight, and may press a First Amendment argument, reports the New York Times. In June, Moody's proposed rating municipal and corporate debt similarly. Fitch Ratings is set to release the findings of a review of its practices today.

For more:
- here's the New York Times article

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