Ranking and the House Committee.
Eventually! "The story of the credit-rating agencies is a story of colossal failure,'' House Oversight and Government Reform Committee Chairman Henry Waxman said at the hearing. Gosh, why is so late? It is absolutely clear for me that a statistical models i.e. pattern models based on historical data implemented by all rating agencies are works only until next Black Swan* (improbable precedent) will happen... despite the fact of this well known weakness and against market logic those models were used to evaluate already questionable securities as investment grade. The error became apparent almost immediately. Why a downgrade didn't happen at the same period of time? That's kind of odd when you think about it, particularly in light of what's been going on in the market for the last two-three years. The only reasonable explanation I can come up with is greed; top management jumped on a tiger and rode it until the death, at some moment they might understand necessity of a jump out but had no clue how to do it without slamming their head. Pathetic.
Of course employees of the agencies were aware about bogus ratings:
S&P employees emails
"Let's hope we are all wealthy and retired by the time this house of cards falters''
"It could be structured by cows and we would rate it."
Moody employees emails
"Combined, these errors make us look either incompetent at credit analysis, or like we sold our soul to the devil for revenue."
* - Although I'm not a big fun of Mr. Talib.