If you were a public servant in charge of investing the local government's funds, and your instructions were "invest the funds in moderately risky investments".

If you were a public servant in charge of investing the local government's funds, and your instructions were "invest the funds in moderately risky investments"... What does "moderately risky" mean? It's certainly not Treasury bonds. You think, say, investing in basket of stocks in the NASDAQ is moderately risky, but are you really sure that's what your superiors want, are you really that sure of your opinion to bet your job on it? Or would you invest in asset X because Moody said it was moderately risky? Did everyone know Nokia is junk before Moody downgraded it? The after-the-fact rating at least ensures everyone who matters knows it.