Nom de Plumber is a Nom de Plume
Fannie and Freddie suffered crippling default losses on reportedly top-quality, safe mortgages which the rating agencies never even rated. Compare versus the similarly harsh default losses for private-label mortgage securities, which the rating agencies had often graded “AAA”.
Perhaps, this side-by-side sniff test reveals that the driver was not liberal credit ratings, but residential mortgages granted loosely in order to finance unaffordable (often speculative) homes.
If the rating agencies were so flawed, then why have “AAA” securitizations of commercial property loans, subprime consumer auto loans, credit cards, equipment leases, and even corporate “junk” debt had fewdowngrades or default losses? Again, the problem seems not rating agencies or even securitization technology itself, but exposure to aggressively underwritten home mortgages.