Triple-A Trouble

Ratings agencies helped create the subprime mess. So why not pay less attention to their ratings?

Illustration by Harry Campbell for TIME

Ratings agencies helped create the subprime mess.

Correction Appended: March 14, 2008

The People at Moody's and Standard & Poor's are used to catching flak when debt markets blow up. Why didn't they see the bankruptcy of California's Orange County coming in 1994? Why did they fail to account for the currency risks brewing in Thailand and Indonesia and South Korea in 1997? And how was it that they were still rating Enron's debt as investment grade four days before the company went belly-up in 2001?

The furor over such missteps usually fades quickly. After a congressional hearing or two, the ratings agencies have always been...

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