Five years after inflated credit ratings helped touch off the financial crisis, the nation’s largest ratings agency, Standard & Poor’s, is winning business again by offering more favorable ratings.In the aftermath of the 2008 Crisis, S&P and its chief rivals, Moody’s Investors Service and Fitch, were criticized for offering top-flight ratings to subprime mortgage securities, making those bonds appear more attractive to investors. The agencies had a perverse incentive to offer higher ratings, as banks themselves choose which ratings agency grades each bond. The flaws in the system became apparent when bonds with the highest ratings plunged in value, inflicting enormous damage on the economy.
