Katich and his manager, Robert Joske, considered legal action for discrimination on the basis of age after Katich, 35, was cut from CA's list of 25 contracted players last Tuesday.
The veteran opener will continue to captain NSW and is considering offers from English counties.
He took particular aim at part-time selectors deciding the future of million-dollar professionals.
"When you talk about money, you get the best in the business for paying. If you pay peanuts, you get monkeys," Katich said.
Cricket Australia's chief executive James Sutherland offered a limp defence of the four-man selection panel, chaired by Andrew Hilditch.
It also includes full-time selector and national development manager Greg Chappell and part-timers Jamie Cox and David Boon, who has resigned.
"I'm not happy about it," Sutherland said of Katich's damning critique.
"We understand Simon is bitterly disappointed."
He urged Katich to "grit his teeth (and) ensure he sends a very strong message to the selectors".
"I'm sure the door is not entirely closed. He is still a fantastic player with a lot to offer Australian cricket," Sutherland told reporters.
Katich has been the second highest run-scorer in world cricket for the past three years.
"There's been talk about that (full-time selectors) for a while now but nothing's been done about it," he said.
"It's a business, there's no doubt about that, that's just the way sport has gone. Being realistic, it's got to go that way because you're dealing with guys' careers.
"This is not just me, there's plenty of other guys out there as well who've gone through this. So maybe something good will come out of this situation."
Katich was strongly supported by former teammate Stuart Clark, who is now chief executive of the Sydney Sixers Big Bash team.
"I think it's a joke that they're part-time," Clark said of the selectors.
"At the moment, they have got some sort of accountability, but when was the last time you saw a selector sacked for a poor selection? I can't seem to remember one."
Katich also criticised a lack of consistency by selectors. "There's been rules for some and rules for others," he said.
