What oversight is there on the ratings agencies themselves? How do we know the distribution of scores is the same today as 10 years ago (and proportionate to credit-worthiness)? Is there anything that prevents credit-ratings companies from under/over valuing the credit-worthiness for large swaths of the population?
Is there historic data available to correlate "consumer credit score" to distressed notes -- and can that be done in a forward-looking manner, to exclude credit score 'fudging' as a factor, and to better be able to know that it's apples-to-apples comparison historically speaking. Otherwise, could it not simply be that borrowers previously known as higher-quality borrowers are simply being rated more poorly/cautiously, for instance? I'm not saying that is the case, but I've always felt that the incentives seemed strange.
Are credit rating agencies paid (by lenders) based upon their prediction accuracy?