Sir, I am sorry but you’ve got a lousy short term memory

Sir you say it is “Time to avoid a subprime future” October 29, and then discuss the efforts that have to be made to avoid individual fraudulent behaviour of borrowers and lenders since “human nature and markets being what they are” history will repeat itself. Surprisingly though you leave out the fact that all the individual frauds would have gone nowhere, had it not been for the blessing they received by the credit ratings agencies. In another editorial the same day “Memory’s ghost” you rightly speak about the great importance for countries to keep hold of their bad events in its past so as to not resurrect them. Therefore, in the case of the subprime affair I can only conclude you suffer of a truly lousy short-term memory. I am so sorry.

If you really want to avoid a subprime future in mortgages or any other sector it is clear that the first thing you need is to remove the quasi-regulatory role of the rating agencies since the fact remains that the better the credit rating agencies might get at what they are doing, the greater their capacity of leading us down the precipice of ever larger systemic risks.