IMHO – rating agencies are just about worthless. In good times, they give the illusion of safety by telling the investing public what they want to hear. In bad times, they make bad things worse by identifying what everyone already knows.
For example, AIG has been the 900 pound gorilla of the insurance industry for years. With a gold plated balance sheet, they were a money making machine for shareholders. After being forced to replace its dynamic CEO, Hank Greenberg, AIG suffered a series of management miscues and losses in the credit markets. Nevertheless, it should not have been fatal, but the ratings agencies are making things worse.
After AIG stock plummeted (and I mean plummeted), S&P decided to notice that a low stock price might make it hard to raise capital and placed them on ratings watch. Their action, of course, caused AIG stocks to plummet even more and made it more difficult for them to raise capital. Basically, they are like a weatherman who only reports what has already occurred.