Brendan Keenan: It's hard to credit, but ratings agencies aren't always right
Damaged by the sub-prime meltdown, these powerful bodies continue to put the boot in -- costing taxpayers more<
'WHAT are these ratings agencies?" someone asked. The simple questions are the hard ones. What are they indeed, and how did they get to be so important?
The idea behind them could not be simpler. If you have money to lend, and do not quite feel up to checking out who best to lend it to, why not pay somebody else to do the donkey work?
That is what the agencies do. Down at the bottom of the pile, there are agencies rating the likes of you and me, to see if there is anything in our credit history which makes us a poor risk for a car loan. At the top of the pile, Standard & Poor's (S&P) says the government of France is not as safe as it might be.