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McGraw-Hill CEO Terry McGraw III, appearing on CNBC. The full interview can be seen here.

What goes on at McGraw-Hill, the mysterious Midtown company that makes New York’s state tests? One answer: The company is not-so-quietly producing a slew of ratings lambasted for being inflated, corrupt, and totally bankrupt.

I don’t mean more state test scores. I mean credit ratings churned out by Standard and Poor’s, the ratings agency that makes up nearly half of the company’s business, according to CNBC.

Yes, that’s the same ratings agency that has been criticized for inflating the value of companies from Enron to Bear Stearns.

One of the biggest criticisms of S&P and agencies like it is that their customers have an inherent interest in being rated highly. (more…)