Conflicted, profit/bonus maximizing credit rating agencies failed miserably in the last crash but are now warning about the next one.  According to Moody’s Investor Services (as reported by Institutional Investor):

Given that B3 is six levels below investment grade, this has prompted “warnings from Moody’s that defaults in the next downturn may exceed the spike seen in after the 2008 financial crisis.”

The reporting continued that Moody’s “expressed concern over a potential surge in downgrades to the next ratings level, Caa, when good times end for the economy,” and that it “believe[d that] the number of Caa issuers could easily exceed the 2008-2009 recession and fuel defaults above the 14 percent default rate in the fourth quarter of 2009.”

Read the full article here.