I tend to see the big issue in having people too far removed from the investment/risk rather than the ratings themselves. Which is why I call out the bundling as securities.
No one at the time thought the ratings were bad because they bundled good and bad mortgages and were accounting for default rates. However, spreading the risk of mortgage assets to every financial institution meant there was no escape when the housing market burst.
I tend to see the big issue in having people too far removed from the investment/risk rather than the ratings themselves. Which is why I call out the bundling as securities.
No one at the time thought the ratings were bad because they bundled good and bad mortgages and were accounting for default rates. However, spreading the risk of mortgage assets to every financial institution meant there was no escape when the housing market burst.