Ultimately, though, the ratings agency regulations will only be as strong as the oversight of  derivatives, because credit default swaps are the secret ingredient in cooking up a triple-A rating – they provide the insurance that lets the ratings agencies promise investors they’ll get paid. As James Kwak, Gretchen Morgenson and others have noted, the administration’s proposed credit default swap regulations exempt “custom” transactions from the proposed oversight-and-exchange system – meaning that AAA ratings could continue to be propped up by dubious derivatives.