Why Aren't Ratings Agencies in Jail?

I actually agree with you to a point.
There heads of the rating agencies clearly engaged in control fraud, so while the NRC'S may try to defend saying they only offer an opinion, there's something wrong with this defense. S&P in particular has used the current debt negotiations to advance their agenda as being considered a legitimate rater of debt. If the S&P'S, Moody's and Fitche's want to retain this role, congress needs to change the standard by which they are held to, and treat them more like an auditor.
By the way, the problems with the rating agencies rougly coincidides with a change in their subscription model from being paid for by bond buyers to being paid by the bond issuers.

The ratings agencies have long been worthless, not just on mortgage bonds.

q: what is a regulator?

a: someone not smart enough to get a job in the industry they regulate.

The ratings agencies have long been worthless, not just on mortgage bonds.

Everyone knows they are worthless buy and sell side alike. A AAA rating allows banks to load up on dodgy debt without putting up reserves. So one could say the regulators enable the NCR's who allow buyers to load up on junk. The bonds the banks got the most in trouble with were all AAA originally, not junk rated.