A central factor contributing to the housing bubble was the fact that the bond credit rating institutions, primarily Moody's, Standard and Poor's, and Fitch, were receiving very large sums of money from the major Wall Street investment banks in return for their AAA rating stamp of approval on offered investments that were actually much riskier than their rating would suggest. As risk was purposefully concealed by the profound levels of complexity associated with the clever manner in which it was combined into packages such as CDOs by the investment banks, these rating agencies were commissioned by these banks for the purpose of providing unrealistically high ratings. The large Wall Street investment banks were in effect, combining variously valued trinkets and poop into very attractively wrapped packages (AAA rated) that were nearly impossible to open for adequate inspection by prospective buyers, thus forcing the buyers to rely upon the appearance of the package (the rating). [See Derivitives (finance)] [See Credit Bond Ratings - Criticism For all the talk of financial sector reform by Democrats and fears of the resulting regulation in the minds of Republicans, this situation has not been addressed, at least as far as I am aware. [See last sentence of first quote, above]. I can't imagine why those investors who were left holding the bag (of toxic assets) after the 2008 meltdown aren't screaming bloody murder at this collusion between the ratings agencies and the issuers of the investments. Imagine how much you would trust a newspaper article's judgement concerning some issue if you knew that the newspaper had been paid a large amount of money by one of the relevant parties to construct the article so as to lend a favorable light to their particular side of the issue. It seems to me that the ability to buy favorable ratings in order to make risk appear less risky constitutes a form of fraud. The response of the rating agencies when called before Congress to testify about this situation was, "Our ratings are merely our opinions. We offer no guarantees". OK - true, their ratings are "opinions" - albeit, purchased ones! But if those opinions/ratings are to be meaningful, aren't they supposed to be based on objective analysis rather than what amounts to bribery??? Anyone have any thoughts on what should (if anything) be done about this situation? Should the issuers of investment securities be permitted to purchase rosy ratings from ratings agencies and thus make risky investments appear less risky to potential buyers than they actually are? Is this a form of false advertising - or fraud?