A recent Reuters column carried this headline: "Rating structured bonds is impossible." It's a sentiment many would share in the wake of the CDO meltdown. Despite lots of criticism, there hasn't been a revolutionary shift in the way structure debt is rated. The big ratings agencies are still plying their trade in familiar ways.

This was underscored by a troubling wave of downgrades of re-remics late last year. Standard & Poor's said the downgrades were the result of a "system error" that "caused the loan group mapping for these transactions to be incorrectly displayed in our surveillance systems," according to Bloomberg. The agency seems to be saying their calculations were wrong due to some programming bug.

Since then, critics have taken the credit raters to task--all over again.

"During the mortgage securities boom, bankers knew more about their bonds than the ratings agencies did and took advantage. A similar problem occurred with re-remics," ProPublica concludes. One former Moody's executive tells the new source, "What we've seen in re-remics truly does encapsulate everything that was wrong not just with ratings agencies, but with banking system as a whole during the boom."

For some, the issue now is whether the moment for meaningful reform has passed. In this view, Dodd-Frank failed to address the most pressing problems, leaving the industry vulnerable to similar shenanigans.

For more:
- here's the ProPublica article via the New York Times

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