Lawmakers are finally breaking up the cozy, destructive relationship between banks that packaged residential mortgages for resale and the credit-rating agencies that so ill-served investors and, ultimately, taxpayers. Fitch, Standard & Poor’s, and Moody’s Investors Service — an AAA oxymoron — were supposed to do arms-length assessments of mortgage-backed securities that were subsequently minced into some of the most toxic financial paper in U.S. history. In fact, the agencies were rubber stamps peopled with many analysts ambitious for high-paying jobs that grateful banks might offer as a reward for an A-plus rating.
