This Sunday's New York Times magazine has an excellent piece on the rating agencies (i.e. Moody's, S&P, Fitch) and their role in the current credit crisis.
One thing that the article does not mention is that in addition to all of the conflict of interest and underlying data problems, the rating agencies also could not keep up with the plethora of new structures being created. They could not adequately model each and every new structure, and so we were forced to make even more approximations when determining default profiles for securities.
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