A reader calls my attention to Paul Krugman’s column. Krugman gets his share of criticism around here, so it’s only fair to point out when, as the reader put, he “actually makes sense.”

He gets points by conceding the point I raised: “When Goldman Sachs employees bragged about the money they had made by shorting the housing market, it was ugly, but that didn’t amount to wrongdoing.” I don’t concede it’s all that ugly, but for Krugman, that’s a step away from the populist drooling that has transfixed most of the media.

He then goes on to make a helpful suggestion:

No, the e-mail messages you should be focusing on are the ones from employees at the credit rating agencies, which bestowed AAA ratings on hundreds of billions of dollars’ worth of dubious assets, nearly all of which have since turned out to be toxic waste. And no, that’s not hyperbole: of AAA-rated subprime-mortgage-backed securities issued in 2006, 93 percent — 93 percent! — have now been downgraded to junk status.

What those e-mails reveal is a deeply corrupt system. And it’s a system that financial reform, as currently proposed, wouldn’t fix.

The rating agencies began as market researchers, selling assessments of corporate debt to people considering whether to buy that debt. Eventually, however, they morphed into something quite different: companies that were hired by the people selling debt to give that debt a seal of approval.

This at least seems to be an area worth exploring in greater depth. But as Krugman points out, the current legislation doesn’t do much about this issue. (“The only provision that might have teeth is one that would make it easier to sue rating agencies if they engaged in ‘knowing or reckless failure’ to do the right thing. But that surely isn’t enough, given the money at stake — and the fact that Wall Street can afford to hire very, very good lawyers.”)

One problem with huge reform efforts is that they usually focus on the wrong problem. In this case, the frenzy to eliminate risk — an impossibility if one wants to preserve entrepreneurial dynamism — has obscured more productive activities, including reduction or elimination of conflicts of interest, which is a worthy legislation goal. But “increasing rating companies’ independence” doesn’t sound nearly as exciting as “going after Wall Street greed.” So we never quite get around to it.