Ratings

The common excuse given by the administration, the congress and the press for not uncovering the problems in the VA are that they accepted the data given to them by the VA officials. The government kept increasing the VA budget without digging beneath the surface to see what was really going on. I am reminded of a somewhat similar situation that occurred in the insurance industry. The big insurance companies, one of which I worked for, would submit information to rating companies like AM Best and Moody’s and these companies would accept this information and then evaluate the safety of the insurance company. In addition the insurance companies paid the rating companies for this service. Over time, incidences came up, where insurances companies would suddenly go bankrupt, even though they had AAA ratings. This happened because the information they submitting to the rating companies was false but the raters accepted it because it would be too costly in both time and money to check things out. Does that sound familiar?