Imagine a school with three teachers. But this isn't a public school. It's a private school testing out an innovative new funding system: The kids write the tests, fill them out and then pay the teachers to grade them. If they don't like the grade they get, they don't have to go back to that teacher.
Sound good?That's not how we run schools, of course. But it is how we run Wall Street. The three major ratings agencies -- Standard & Poor's, Moody's and Fitch -- are paid by banks to grade (or "rate") their products.
Ezra Klein on the ratings agencies