http://calculatedrisk.blogspot.com/2008/11/charlie-rose-conversation-with-bill.html
In it, Ackman blames much of today's crisis on the unethical practices of credit rating agencies like Moody's -- rating investments as triple-A or even double-A when they didn't deserve. Moody's, for example, would feel pressured to give stuff with CDOs in it a higher rating than, say, S&P would, so the enmity asking for the rating would go with the triple-A issuser, Ratings agencies were pitted against one another to paint a rosier picture of assets, to gut business.
So, Ackman calls the ratings agencies a "quasi-regulatory agency" tha now, because of the profit motive to tell peoplewhat they wanted to hear, failed in hindsight.
So my question/idea is:
1) Can the credit rating industries simply become federalized, to ensure a greater degree of independence and thus trust in their veracity for ibvestors?
2) Or maybe one federal credit rating agency could be plunked down alongside the private ones, to "keep them honest" and provide a benchmark for them, much the way the Medicare physician fee schedule indirectly affects the pay of private sector doctors (though private insurers will never admit this) since it is a de facto announcement on what doctors all ought to make for such and such procedure?
3) Or a federal agency that oversees more stringently the credit ratings agencies from the outside, to ensure hey don't do this again?
If something already like this exists, then I'd say go with 1) or 2) above.
-B.