There are three leading bond-rating agencies in the U.S.: Standard & Poor's (S&P), Moody's, and Fitch Group. The three agencies were established in the early 20th century and grew in influence during the Great Depression of the 1930s as newly empowered government bank regulators used the bond-rating system to evaluate the soundness of bank assets. The agencies' status was further bolstered as the economic and financial system became more turbulent with the stagflation of the 1970s. By 1975, the Securities and Exchange Commission (SEC) deemed the three agencies nationally recognized statistical rating organizations (NRSROs).

Which of the following most called into question the credibility of the major rating agencies in the early 2000s?

The bond-rating agencies failed to give high enough ratings to securities backed by subprime mortgages.

The leading rating agencies lost a lot money as the housing bubble grew from 2003 to 2007.

The rating agencies were giving inconsistent bond ratings to the debt issued by Enron and WorldCom.

All rating agencies were giving high bond ratings to the debt issued by Enron and WorldCom.