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Comment by themartorana | Hacker News Reader

I am still flabbergasted that after rating junk swaps as high as possible and being paramount in both misleading investors worldwide and bringing the world to economic crisis that is still being felt, that Moody's and S&P not only continue to exist, but investors still look to them for ratings!!

"Flabbergasted" is the only word.

Also blah blah no one in prison.

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By law, many institutions must buy rated paper.

So Moody's and S&P are like Ziploc bags at TSA lines - required by law.

Well there's some sweet regulatory capture.

Keep in mind that there are massive incentives for ... well, everyone, or at least every company ... to mislead these rating agencies, as lending to companies is also completely dependent on those ratings.

And next we ... insist on having competition by these rating agencies. They're being paid by companies selling debt, so effectively they're being paid to get a good rating (and for the attention in the press their ratings get).

This can't be fixed.

Because someone has to do the research, and rating agencies do it better than anyone else. Not saying that they do it perfectly...

"and rating agencies do it better than anyone else." Could you hint us to any evidence for your claim?

You're competing with people who have 6 figure incentives (at least) to reverse engineer how the ratings are derived and take advantage of it in any way possible to drive profits.

I guess the truth is closer to "Ratings agencies do the best they can with the people, technology and incentives they can afford"? How do you change this though?

There is no one else :)

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