I just finished reading "All the Devils Are Here" by Bethany McLean and Joe Nocera. It is one of many books chronicling the global financial crash. However, there is less narration and more conclusions than most. The one that most resonated with me was "The rating agencies were at the very heart of the madness."
While there has been much highly-deserved criticism of bankers, the credit rating agencies have gotten off far too easy. The big three are Moody's, Standard & Poor's, and Fitch's. They are all still standing! Sure, they have fired some of their senior executives. But, they have not been fined enough to reflect their guilt.
If bankers ran around the world selling crap as investment, they were acting as salesmen. The quality of that investment was certified by the credit rating agencies. In order to make money, the rating agency would be paid by the banker. If the rating agency didn't rate the credit quality high enough, the banker would take his business and fees to another rating agency. The credit rating agencies sold their soul for money! But, that is not a crime.
I understand why the bankers AND the credit agencies did what they did . . . GREED! What I don't understand is why the credit rating agencies got off so easy? Why has nobody gone to jail? Or, even to trial? Maybe, the regulators are still asleep? We paid a terrible price the last time the regulators feel asleep and didn't want to "interfere with the functioning of the market."
The "banality of evil" was a phrase coined by Hannah Arendt to describe the Holocaust, when ordinary people accepted the rules of their environment and participated in actions they would have previously abhorred. The nerds and geeks in credit rating agencies were pretty banal indeed.
