These bond insurers are among the best clients of the rating agencies, since the agencies pocket a fee for reviewing every bond issue being insured.

FORBES: Magazine Article

In exchange for an upfront fee, a bond insurer would take a bond with a midling investment grade rating -- single-A, for example -- and offer to pay investors what they were due if the issuer defaulted.

FORBES: Buffett Offers Bond Insurers A Devilish Deal

Despite the high jinks and copious drinking (or perhaps because of it), their large brains came up with a way of reducing risks for bond buyers: a bilateral contract that, for a fee, enabled investors to pass on the risk of default to another party.

WSJ: Give Some Credit to Credit-Default Swaps

Vanguard Group, known for its low-fee funds, says it plans to launch Total International Bond Index later this year.

WSJ: Upside: Finding Better Bond Yields Overseas

Any entity seeking to issue a bond in the United States will be required to pay a registration fee (which will be, by design, smaller than the amounts currently charged by any one rating agency).

FORBES: For Better Rating Agencies Go Back To Campus