Rating agencies have clearly misused the regulatory protection that was granted to them all these years. They have failed to exercise due diligence at the time these CDO's(asset backed securities) were structured by investment banks in hundreds of tranches backed by assets of poor credit quality.
It is not the first time credit rating agencies have missed out on assessments. They are always one step behind the actual situation, as if, their duty is to inform rather than predict failures. Remember Enron. I always believe Stock markets know the health of a Corporate much better than any credit rater.
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