The classic business model of the ratings agencies is one any man on the street would immediately flag as corrupt and problematic. A bank devises a security, a bank hires an agency to rate the security, and then the security is ushered into the world with the magic blessing of the ratings agency. Obviously you're going to get a situation like the one Nathaniel Popper reports on in today's New York Times where S&P gives higher ratings than the other agencies and S&P gets a larger market share as its reward.
This dynamic did much mischief during the crisis years and it's alive and well.
Something interesting about this is that there's a fair amount of sophisticated (or "sophisticated") argumentation out there to the effect of how in an idealized marketplace this kind of certification-not-regulation should work just great. But if you look at a situation like kosher certification where you're not going to have the state step into a religious matter so you have to rely on market solutions, what you see are constant scandals over hot dogs and Passover and everything in between.
TODAY IN SLATE
Blacks Don’t Have a Corporal Punishment Problem
I Bought the Huge iPhone. I’m Already Thinking of Returning It.
Scotland Is Just the Beginning. Expect More Political Earthquakes in Europe.
Lifetime Didn’t Think the Steubenville Rape Case Was Dramatic Enough
So they added a little self-immolation.
Two Damn Good, Very Different Movies About Soldiers Returning From War
- North Korea: American Sentenced to Hard Labor Wanted to Become “Second Snowden”
- Almost One in Four Americans Support Idea of Splitting From the Union
- ESPN Story Alleges Ravens, NFL Are Scapegoating Ray Rice in Coverup
- Dean of Islamic Studies at University of Karachi is Murdered Amid "Blasphemy" Allegations
The Most Terrifying Thing About Ebola
The disease threatens humanity by preying on humanity.