At a certain level, it stops mattering. The faculty become the school. Suppose Steven Shreve and the group around him were to move to Swampwater University. Then Swampwater would become a top-ranking quant school. To Shreve, his personal professional reputation may matter; that of the department or school he's with becomes secondary or immaterial. The same for the best students: they may want to be taught by Shreve or work with him. What school he's at becomes secondary. If they go into the job market and say they worked with Shreve, it has more significance than saying they got a GPA of 3.9 at Harvard. At the top level, the usual rules simply have no meaning, or are broken all the time. If I go to Derman and start speaking about some abstruse and cutting-edge theory, my previous GPA and work experience becomes irrelevant in his decision to hire me.
What you are saying applies to second- and third-rate academics who take great pride that they're at Swampwater U, which has a higher reputation that Jerkwater College. In like manner, the U you attended, and what GPA you got, assume vast importance in the hands of people who have no other way of assesing your worth (or even worse, are indifferent to your real worth), or where the resume is assessed by a computer program. This is part of an ongoing bureaucratisation of society. In this set-up, a physicist like Einstein or mathematician like Ramanujan would have remained obscure because of lack of appropriate GPA (Einstein), or lack of credentials (Ramanujan).
What rankings are there other than published rankings? "Ranking" isn't some abstract concept that has an independent ontological existence. By definition, it means "published ranking." Ah, perhaps you mean a public consensus on ranking?
