There Was a Solution to the Corruption of Bond Rating Agencies: Timothy Geithner Killed It

The Wall Street Journal ran a lengthy piece on how bond rating agencies are again giving inflated ratings, in this case to collaterized loan obligations that include tranches of a variety of bonds and loans. Inflated ratings was a major problem in the housing bubble years, with the major rating agencies giving investment grade ratings to mortgage backed securities that were filled with subprime mortgages.

The piece notes the basic incentive problem that the issuer pays the rating agency. This...