There's a revealing scene in the film version of MichaelLewis's The Big Short. It's 2007; the subprime mortgage crisis hasyet to unfold. Two hedge fund managers visit a Standard &Poor's executive in her office on Water Street in Manhattan. Oneasks the exec to name a time in the past year when the companydidn't give a bank the AAA rating it was seeking. She demurs. “Ifwe don't work with them,” she says, “they will go to ourcompetitors. It's not our fault. It's simply the way the worldworks.”

That was the way the world worked then—and, 10 years later, it'snot entirely clear how much has changed.

Before the crisis, Standard & Poor's Global Ratings (nowS&P), Moody's Investors Service and Fitch Ratings—the BigThree—showered investment banks with a bounty of AAA blessings,giving them the regulatory license to gobble up mortgage-backedsecurities. When the subprime market crashed, these complex debtinstruments infected the balance sheets of banks worldwide, wipingout an estimated $11 trillion of household wealth in the U.S.alone.

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