Kevin LaCroix is not a fan of the National Community Reinvestment Coalition's lawsuit against Fitch's and Moody's, alleging that they improperly overrated the creditworthiness of inner-city properties:

The NCRC complaint belongs in a category with the nuisance lawsuit the City of Cleveland filed against the major investment banks (about which refer here). Both actions involve novel legal theories, and both attempt to scapegoat downstream deep pockets for the consequences of upstream transactions. Both depend entirely on simplistic causation analyses that disregard the multitude of causes that contributed to the subprime mess.

These blame casting exercises may gratify claimants or even provide catharsis, but these exercises in creative lawyering (and I do not mean that as a compliment) will do little, other than contributing friction costs, to affect the current deplorable conditions in the housing market. To be sure, there are no easy solutions in these circumstances, but simplistic litigation definitely does not help.

More here.