Regulators have interests, too - interest in looking like they've been acting appropriately. They are just as invested in keeping big problems hidden in the hope that they'll go away, so they look like they're doing their jobs.
The European Central Bank is aggravated at ratings agencies for downgrading Greece, Portugal and Spain in anticipation of a Euro debt contagion crisis (after, as one blogger pointed out, everyone got mad at them for NOT downgrading mortgages in anticipation of a mortgage crisis). Not exactly what the financial reform bill has in mind when it hands over more power to regulators.
More regulation doesn't fundamentally change the fact that regulators and politicians are inherently bad at figuring out what's going on and acting upon it.
"Who is Standard and Poors anyway?" Is that guy for serious? It's the EU, so I guess I shouldn't be surprised, but still...
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