Moody's has now agreed to pay $864 million as a penalty for failings in the ratings of securitised mortgage bonds in the run up to the American housing crisis. Our problem here being that this doesn't solve the basic economic problem we've got surrounding the ratings agencies. That problem being that someone, somewhere, needs to pay for them if we're actually going to have them.And the current system is that the bond issuer pays, not something we're very keen on really. For the pressures to offer a good rating as opposed to an honest one are increased here--he who pays the piper and all that. Our problem is that the alternatives are worse.“We’ve known for years that conflicts of interest at credit-rating firms were a significant factor in causing the 2008 financial crisis,” Senator Al Franken, a Minnesota Democrat, said when Moody’s announced that it expected to be sued. “We can’t let Wall Street be above the law,” he said.Franken has proposed doing away with the rating industry’s payment model, and in the writing of the 2010 Dodd-Frank Act targeted the way that bond issuers pay for their own debt to be assessed. The Securities and Exchange Commission, in its consideration of reform proposals, ultimately decided to keep the same business model for the industry in place. Since then, complaints have persisted that ratings shopping is alive and well in mortgage- and asset-backed bond markets.Yes, but who else? The current news: “Moody’s has agreed to pay $864m to settle allegations that it inflated the credit ratings of subprime mortgage bonds that contributed to the 2008 financial crisis, the Department of Justice said on Friday.”That's our basic problem with the industry structure: “The terms of the deal will see Moody’s pay a $437.5m fine to the Department of Justice, and the remaining $426.3m split between 21 US states and Washington DC.And the official announcement: "Moody’s failed to adhere to its own credit rating standards and fell short on its pledge of transparency in the run-up to the Great Recession," said Principal Deputy Associate Attorney General Bill Baer.　"Today’s settlement contains not only a significant penalty and factual admissions of its conduct, but also a commitment by Moody’s to new and continued compliance measures designed to ensure the integrity of credit ratings going forward."