The SEC is looking at how the ratings agencies do business:

The U.S. Securities & Exchange Commission (SEC) is looking into the workings of the three main credit rating agencies, prompted by their handling of the subprime crisis and a report of computer errors at Moody’s .

“We sent letters to Moody’s, Standard & Poor’s and Fitch asking for them to get back to us on aspects of their methodology,” said Erik Sirri, director of the SEC’s trading and markets division.

The basic problem, however, is that they are paid by the people that they rate, creating an inherent conflict of interest.

This is at the core of many of the problems that we are seeing now. The felons are running the prison.