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This article was authored by Joe Omansky, Founder, Sky Fund LLC, SkyRank System of Hedge Fund Ratings

Oligopoly Of Ratings Industry: The U.S. Government supported an oligopoly industry primarily consisting of three ratings agencies, S&P, Moody's and Fitch which are considered Nationally Recognized Statistical Ratings Organizations (NRSROs). These agencies are paid by the companies being rated and thus operate under a deep conflict of interest. They rated mortgage pools, Collateralized Mortgage Obligations (CMOs), Collateralized Debt Obligations (CDOs) and other mortgage and asset backed securities with unjustly high ratings and thus overvalued these securities to investors. Due to the conflicts, the ratings did not reflect, with any real accuracy, the risk connected with investing in these securities. Investors came to rely on the ratings and did not perform sufficient due diligence to properly value the mortgage-related securities.

Mortgage "Innovations": Primarily through the sale of Mortgage-backed loans sold to investors, money supply became abundant, and bank capital became easily available to borrowers. Innovations such as zero down payment, interest-only, and 1-year arms provided ample room to build a demand for new new buyers to enter the real estate market and borrow newly created capital from banks. These new entrants to the real estate market, under normal transparent market conditions, would not be able to afford and borrow from banks ......................

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