The credit rating agencies are US regulator empowered bodies - or Nationally Recognized Statistical Rating Organizations (NRSROs) - and so can be dis-empowered as well. Worryingly they are supervised by the SEC - another organisation that hasn't exactly covered itself in glory. It's even worse than the Madoff debacle according to some.
I like the recommendations by James Quinn in this brilliant analysis of what needs to be done - but won't be - to get the world out of this mess:
- Moody’s and S&P should be banned from the rating business. They proved that a AAA rating could be bought. Pension plans, governments, companies, and individuals relied on their ratings. They colluded with the investment banks and must be punished. Their monopoly needs to be ended.
- The SEC needs to be disbanded. We need to push the start over button. They are in bed with Wall Street. They are unable to enforce their vast array of regulations, ignore proof of ponzi schemes, and are a revolving door to top Wall Street jobs. The organization has failed miserably. An agency that does not work needs to be scrapped.