There needs to be many more ratings agencies.  The two big ones need competitors.<p>If there are enough of them then when synthetic CDOs do have bad batches that at least one will want to lead the way in downgrading. It would be much harder to pay off say 10-20 ratings agencies.<p>There has to be some self-interest among ratings agencies to one up another, by upgrades or downgrades because of better knowledge.  I think the lack of competition for ratings is part of the problem that caused 2008. Maybe even ratings based on community as well as authoritative sources, right now they are all authoritative and mostly blackboxes in terms of processes to achieve ratings. The concentration in centralized power in ratings agencies is a bad thing and history says it will bite.