I must have missed when this became apparent.

The dateline on the link is Feb 6, 2013 -- so fairly recently.

BTW, your link seems much more like the coping mechanism low level employees develop when it's clear to them that their situation is absurd and complaining to their superiors won't help than anything resembling knowing fraud.

I think you're correct -- I posit that the knowing fraud was perpetrated by the superiors, who I think must have ordered the relaxation of rating standards that the employees that were quoted in the link were complaining of.

I believe the sequence of events goes like this: Shadow banks (e.g., Lehmann Bros.) wanted to lay hands on large amounts of AAA-rated securities to use as collateral for the repo that funded their day-to-day activities. That plus the lack of regulation requiring mortgage issuers to hold some proportion of mortgages on their own books (and hence skin in the game) led to slipshod or outright fraudulent mortgage screening and wholesale securitization of the resulting mortgages, inflating the housing bubble.

In detail: since security issuers pay the rating agencies to rate the resulting securities, the three big rating agencies were forced to compete for share of this new market, and one way in which they did so was by relaxing rating standards so that super-senior tranches of crappy MBSes got undeserved AAA ratings and could then be sold to satisfy the shadow banks' demand for AAA-rated securities.

I'm tapping out now.