Raters Moody's, S&P Draw SEC Scrutiny

COMPLETE and full corporate transparency for the underlying variables ratings agencies use on any equity or derivative publicly traded, so the public can assess on their own.

I.E. if the big banks had fully disclosed that CDO's consisted of such a high percentage of liar loans, they'd never have been able to pawn that garbage as "triple A".

As for the SEC, I say it's just going through the motions, a slap on the wrist to create the public appearance of exacting punitive measures.

Meanwhile, Moody's and S&P has threatened to downgrade the U.S. - I'm not debating that the U.S. doesn't deserve a downgrade, but to make the argument that S&P lied and rated liar loans "triple A" for a price....I find myself questioning what the fee is for downgrading or upgrading whole countries.

I think ratings co's have no use, the SEC would be better served to mandate precise transparency and public information to everyone...we wouldn't need ratings companies in that case.

It's an intriguing question, isn't it? This is a topic I am always striving to understand better, and your comments suggest some interesting follow-up reading. Thanks!

Incubus, just to play devil's advocate for a minute: I agree a totally transparent system would be ideal - all the same info provided to the raters made public in a perfect world, where experts and "amateurs" (like us) could collaborate openly or work privately to derive their own opinions of each offering. I still think there is value is a standardized rating system that every investor can reasonably understand. The A, B, C rating system does have the virtue of crisp succinctness, even if it's also been used to cover a myriad of flaws. Who could play that standardization/simplification role in a new transparent reality?