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That the rating agencies (S&P, Moody's) at least do a little due diligence before they slap a AAA rating on every single freaking bundle of worthless paper. I'm sure the fact that the ratings agencies are compensated by the paper issuers had nothing to do with all those AAA ratings they gave that junk. Riiiiight....

If securitization is here to stay, put in place a legitimate, arms length rating system/agency so the buyers have a fighting chance at understanding their risk. I get the "buyer beware" principle of our society, but investors are only now realizing that the previously reputable agencies did next to no due diligence on the structured securities. Investors were duped and the issuers were emboldened to go after riskier and riskier home loans, knowing S&P and Moody's were rubber stamping every piece of worthless paper put in front of them (all the while being compensated by the paper issuers). In hindsight, it's a recipe for collapse.

Without a 3rd party rating system, I think it's going to be a long while before buyers embrace structured securities, especially in US residential mortgages. They were the first to explode. Next up, US commercial real estate, credit card and auto loan securities. If the economy doesn't turn around soon (and I have my doubts about this), watch out for these cards to fall.