Credit Ratings Agencies - Separation of Powers!

As the broader markets continue to claw back from the daily lows, I cannot help but wonder why one corner of the global financial crises still remains intact.  In this corner I point to the business model of the credit rating agencies.  Clearly, this model has come under intense scrutiny but unlike the accounting agencies, which were forced to separate its conflicting businesses fairly quickly, the credit rating agencies remain relatively unscathed.

Recall that it was October 2001 that Enron had acknowledged that the SEC was conducting an inquiry.  The accounting companies were forcefully requested, with the passage of Sarbanes-Oxley in 2002, to reconsider the once sound idea of having them police the audit as well as provide consulting services.  In hindsight the conflicts of interest appear obvious, but at that point in time, the new line of business was viewed as complimentary. 

The issue with the rating agencies is even more acute.  I …