A couple of years ago, I wrote a book titled “Distrust: American Style” in which I argued that much of our current social dysfunction and polarization results from a massive loss of trust in our common institutions–not just government, but also big business and even nonprofits. Think of Enron and World Com, think of the Red Cross scandals, think of doping sports stars. Think of the Catholic Church cover-up scandal.
Things haven’t improved since I wrote the book. In the wake of the fiscal collapse triggered by big investment banks and too-cozy relationships with the people responsible for regulating them, there has been enough information to tarnish our confidence in a whole raft of financial and governmental institutions. Pre-eminent among them were the ratings agencies–the entities most of us had long trusted to serve as “grey eminences” protecting us from accounting shenanigans and other trickery by carefully examining the books of those issuing debt instruments. That they operated with little transparency was rarely noted. What we discovered after the proverbial shit hit the fan was that the ratings agencies–paid by the issuers–weren’t above looking the other way in order to collect their very handsome fees. Somehow, this very real conflict of interest had escaped everyone’s notice.
So I must agree with Senator Bernie Sanders, who issued the following statement when Standard and Poor downgraded U.S. debt this weekend:
“I find it interesting to see S&P so vigilant today in downgrading the U.S. credit rating. Where were they four years ago when they, and other credit rating agencies, helped cause this horrendous recession by providing AAA ratings to worthless sub-prime mortgage securities on behalf of Wall Street investment firms? Where were they last December when Congress and the White House drove up the national debt by $700 billion by extending Bush’s tax breaks for the rich?”