>Bank needs a rating on a asset, but their incentive is to get a "better" rating, not a more honest one. There are multiple agencies, so banks shop around for t

>Bank needs a rating on a asset, but their incentive is to get a "better" rating, not a more honest one. There are multiple agencies, so banks shop around for the most favorable one. So, as soon as one agency loosens their ratings, they all follow suit. They sell good ratings. That's the industry. Memorable scene from The Big Short (2015) - "FrontPoint Partners confronts S&P" https://www.youtube.com/watch?v=mwdo17GT6sg https://www.youtube.com/watch?v=mwdo17GT6sg