Credit Rating Agencies Still Suffer from Conflict of Interest

Gretchen Morgenson had a good piece in the NYT this morning on a new report from the Securities and Exchange Commission (SEC) showing that the credit rating agencies still suffer from the same sort of conflict of interest problems that helped stoke the housing bubble. The basic problem is that the issuer of the security that is being rated picks the credit rating agency. This gives the credit rating agency an incentive to give them a good rating, otherwise they risk not being called back for...