While there is plenty of blame to go around in the entire banking debacle, let's not forget who the key enablers were: The rating agencies. Their business model is a modern form of payola, with bond underwriters as customer #9. This allowed them to slap triple AAA ratings on the paper held by firms such as Bear Stearns (BSC).
When you consider just what a criminally negligent job they have done in covering nearly everything, from sub-prime infected RMBS to all manner of derivatives, to the duolines themselves, it is really beyond comprehension.
Last week, we heard from S&P, who opined the end was in sight for the sub-prime write downs. Are these guys really the best messenger for this?
(I may have to change the name of this blog to The Big Schandenfreude)
Which leads to this advert, circa 2005. It's a classic:
If anyone can scare up the full report, send it to me @ Yahoo...
States and Cities Start Rebelling on Bond Ratings
JULIE CRESWELL and VIKAS BAJAJ
NYT, March 3, 2008