What is the fundamental reason that independent rating agencies are (or would be) unreliable?
Conflict of interest, for one. These rating agencies get funded from somewhere, they get products from somewhere, their board members have friends in other companies, etc.
Lack of disclosure - goes hand in hand with the above. If there's no central authority mandating disclosure of information these agencies sure as shit aren't going to volunteer it. Joe Bob board member from Great Ratings is also a major shareholder of Big Company... who'da thunk it?
Both are valid concerns of course, but I believe that they could be overcome by appropriate consumer behaviour. Lack of disclosure for instance should not be an issue if you just don't trust agencies that aren't fully transparent and auditable by the consumer. They could even be open source public platforms. I really don't see why not.
And conflict of interest doesn't strike me as a problem specific to this kind of organizations, it does happen with state institutions as well. Again, transparency would help a lot.
Of course as I said earlier, I don't believe that this level of consumer awareness is automatic, the society has to evolve in that direction. It's my personal opinion is that we need to do away with centralized strong authority wherever possible.
When discussing about what is
possible though, it's expected to be accused of being too naive. Bitcoin is a good example to this. So I think it's crucial not to be too dismissive about these ideas.
Basically all the issues the libertards will list with government agencies also exist with indepedent ones, but with the added downside of no accountability.
Maybe the difference in opinion here is caused by difference in experience in these matters. I don't come from a western background, so it's probable that the State I had to deal with was a lot shittier than yours.
I haven't actually witnessed, and don't even know how government agencies can be held accountable in a useful sense. What will happen at most is civil servants being shuffled around; they can't even be fired easily. There isn't much you can do as a citizen to threaten a State agency's existence or change its operating principles. Granted, you can put pressure on the politicians, but then as a preventive measure these agencies get too cautious and too political. For instance, you can't invent something that the public would react irrationally against and expect not to be regulated. Or abolish a regulation that causes inefficiency but the public feels safe with. They are famous for putting regulations that only big companies can comply with, since no one can actually measure the expense of this; and as a consequence, the State gets more and more dependent on these companies, which come to share the sovereign power with the State. And they instill fear into the public if they want to regulate something, again Bitcoin comes to mind.
I'm not saying that the choice is obvious, there is always a trade-off. I believe though, that independent agencies can be held practically accountable, and be punished by simply ignoring them.