Another great review from Jake Zamansky on the role of the ratings agencies in the subprime crisis.
Investors: Beware any time a market player has a government protected, exclusive franchise to print money.
My take on this from the perspective of the Big 4 later coming later today.
Ordinarily we would just let market forces deal with such failure. However firms like Moody’s, Standard & Poors, and Fitch are granted special competitive advantages because they are part of a select group of eight companies designated as Nationally Recognized Statistical Rating Organization (or “NRSRO”). Based on their record, the government should not be protecting them.