Time Magazine has an article pondering a question on many minds after the DOJ levied a major civil suit against S&P over mortgage-related credit ratings. The magazine is wondering what the role of the credit ratings is and what it should be in the future. Here is an excerpt from the article:

And long before the financial crisis, the idea that the ratings agencies were beholden to issuers rather than investors was in the air. These firms were criticized for waiting too long in the midst of the Enron scandal to downgrade the firms debt. In fact, ratings agencies have been coming under fire as far back as the New York City debt crisis of the 1970s for failing to alert investors to the true creditworthiness of certain issuers.

So this case does raise the question of why the feds are only now cracking down on S&P. Does it really take six years to put a case together, when it was all but certain that this sort of misleading behavior was rampant in the run up to the crisis? Furthermore, why are we not seeing action against Moody’s and Fitch, the other two major ratings firms? And perhaps most importantly, this case should have everyone asking: Just what purpose do these ratings agencies serve?