A Boring Headline That's Really the Whole Enchilada

Let's call the mortgage mess and credit crisis a flood for a moment. If your village flooded you'd build a dam right? Well what if you built a dam, and a passer by said, "Hey, I see a leak." Or better, what if an actual engineer said, "Hi, I do this for a living, and I see a leak and the dam is going to give way." What would you do? Would you ignore them or focus on the problem?

That's what is going on right now. The Wall Street Journal's story today, "Finance Group Questions Bond-Rating Proposals" likely sounds boring to those not following the market. That's a shame. Why you care is because it really is the whole enchilada when it comes to making sure we don't have another Wall Street meltdown. In fact, if done right it would inject the type of confidence into the market that would get the bulls frisky.

The story is about how the agencies that rate investment products are susceptible to pressure and their own internal controls are not working they way they would want. In other words, the ratings that you and other investors count on may not be entirely on the nose. These are supposed to be the dams that hold back developing problems like the credit crisis by pointing out that someone's math doesn't add up. If this doesn't get fixed we'll have another flood.

AND, the rating agencies are not the only ones under this type of pressure. We recently published an op-ed on how the same thing is happening with accounting firms. Both the rating agencies and the accounting firms are the lynch pin in whether you/we trust what Wall Street tells us.

This is a big deal. The dam is leaking.