http://www.cnn.com/2011/OPINION/08/19/franken.rating.reform/index.html?hpt=po_t2(snip)
Just two years after it was written, the house of cards that S&P helped build collapsed and roiled the global economy. And while I welcome the news that the Justice Department has launched an investigation into S&P, I imagine it will conclude what a lot of us have long known: S&P made record profits by knowingly handing out sterling credit ratings to complete junk.
It was the incompetence and corruption by S&P and its peers, Fitch and Moody's, that played a pivotal role in our financial meltdown that cost Americans $3.4 trillion in retirement savings, triggered the Great Recession with its massive business failure and job losses, and consequently caused the explosion of our national debt.
The root of this corruption? The flawed "issuer pays" model on which the entire credit rating industry is based. The Big Three rating agencies were paid a fortune by Wall Street to hand out pristine AAA ratings to the subprime mortgage-backed securities the banks issued -- securities that turned out to be junk. No AAA rating? The issuer would take its business -- and its hefty fees -- elsewhere.
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When the Big Three's house of cards finally collapsed, the rest of America paid the price. Until we rein in the corruption of the credit rating agency industry, we are just asking for it to happen all over again.