The story of the credit agencies remains to play out. In what amounts to a macro version of a crooked appraiser pumping the value of a to-be-bought home so that a shaky loan will go through, these agencies saw that they would be edged out of the very lucrative rating biz if they applied actual intelligence to the truckloads of crap debt tranches that were coming to market. And so they played along. My prediction is that these cos will be entangled with piles of lawsuits for a very long time to come.
Indeed. Unlike the other failures (Orange County Bankruptcy, Enron), this time they can’t blame it on fraud by the auditing firms, or issuers.
Investors must exercise caveat emptor — relying on firms that get paid to do the research (similar to the hyping of dot.com stocks by Wall Street “analysts” in the late 90s) is a game for a fool.
All the nasty gloating by some losers on this thread reveals much about their crypto-Marxist, anti-business mentality is for naught.
But you, ASD, bring up an important point - the ratings agencies suffer from a fundamental flaw in their business model: they are paid to assess the creditworthiness of the people who are paying them.