It seems the Administration thinks that regulating the credit rating agencies is a bad idea.
“To do so would put the government in the position of validating private sector actors and would likely exacerbate over-reliance on ratings,” the Treasury’s assistant secretary for financial institutions Michael Barr said.
Gorilla sees the logic in this: “Having the government guarantee trillions in Triple A-rated toxic assets is clearly the best way to validate private sector actors. We may not be able to define moral hazard, but we remove it when we see it”.
Tags: moral hazard, ratings agencies, Treasury