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The problem with rating systems is they are third-party. If you want to knowingly package assets with a poor grade bad at a better rating, you will shop around until you find a rater who will give you the grade you want. It becomes the cost of doing business. It takes one bad seed to mis-grade. What's worse is, the rating agency that grades fraudulently will get paid more, since the one's trying to maintain integrity won't want to mis-grade.

Broader point here: grading systems aren't all that resilient. It only takes one bad actor to threaten the whole system, if we assume ratings (in aggregate) are always believable. Dodd-Frank may have been re-worked but I wouldn't, for a second, assume there isn't a loophole in there that will allow the bad guys to resume.




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