One other piece of history is important: In the early 1970s, the basic business model of the large rating agencies changed. In place of the “investor pays” model that had been established by John Moody in 1909, the credit rating agencies converted to an “issuer pays” model, whereby the entity issuing the bonds also pays the rating fifi rm to rate the bonds. The reasons for this change of business model have not been established defifi nitively. Several candidates have been proposed.
