Are Private Companies Inherently More Efficient Than The Government?

You'd think so. If a private company runs out of money, it goes bankrupt or gets sold. If a government agency runs out of money, it gets more funding from the politicians.

The credit rating agencies are quasi-monopolies. They don't operate according to the same rules as most businesses.

They've rightly received a lot of the blame for the meltdown of the world's financial system. They gave high grades to a lot of junky mortgage-backed securities.

The Washington Post says: Take the major credit rating agencies — Moody's, Standard & Poor's and Fitch. These companies assign ratings to bonds issued by corporations and governments, ranging from AAA to D. (Specific scales vary slightly.) The ratings are supposed to reflect the expected likelihood that the bond will be paid back. During the boom, they gave AAA ratings to thousands of bonds issued as part of collateralized debt obligations backed by subprime debt (now known as "toxic assets"); over the past two years, over 60% of mortgage-backed securities have been downgraded, many to junk status, as it became clear that they were not, in fact, as safe as U.S. government debt.

This is all old news at this point. However, Kevin Hall of McClatchy has new news:

"Moody's punished executives who questioned why the company was risking its reputation by putting its profits ahead of providing trustworthy ratings for investment offerings.