Rating Agencies and The Great Recession

There is a provocative editorial in Saturday's NY Times that criticizes Moody's, Standard and Poor's and Fitch for their role in rating the subprime residential mortgage-backed securities and C.D.O.’s that turned toxic and led to the failure of numerous financial institutions. The article states that these securities were rated as AAA investments or as safe as U.S. Treasury Bonds! It also argues that the fees paid to the rating agencies create an independence problem akin to auditor independence issues. It's interesting that this significant "assurance service" is rarely scrutinized and has managed to stay out of the spotlight even during this current economic meltdown where they were heavily involved.