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”.
