When the securities/loans were packaged up and sold on, the ratings agencies were supposed to rate them, as you know, these NINJA mortgages ended up rated at AAA.

The CDO`s that Goldman claimed for on these were either 1) never rated at all just stamped AAA so by neglect 2) the ratings agencies lied outright about them.

AIG were lazy and didnt do any due diligence. They took the word of the ratings agency rating the underlying loan or security whether to accept the liability if it tanked.

AS you know, the ratings agencies earn their fees from….the big banks eg. Goldman. It doesnt take much effort to suggest that someone like Goldman used their muscle and reputation in the market to lean on the ratings agencies to push whatever rating they likes for whatever crap they packaged.

The worse the debts passed with a greater rating, the greater the potential for greater profits when it goes down the toilet. Its in Goldmans interest to sell on crap.

How the ratings agencies were able to give a AAA rating to junk debt packaged up and resold by Goldman beggars belief, at worst its fraudulent. If Goldman are not to blame for any of this, why didnt they query the ratings for the junk they were selling on? Do they have no duty of care to their clients? No duty of care to the Federal Authorities? They would have known the ratings they were getting were not warranted. Was it all too convenient to turn a blind eye?

At best its a cynical manipulation and exploitation of a market with no regulation designed to royally screw their customer and the insurance company. At worst its just fraud.