The Return of Ratings Shopping

March 7, 2012

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Chairman of the Treasury Select Committee, Andrew Tyrie, reportedly ended a session of grilling the rating agencies with the following: “If even one of the ratings agencies had drilled down deeper into the structure of products developed [in the run-up to the crisis] and challenged them, we would all be in a much better place […]

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Illinois Attorney General Sues S&P – Initial Thoughts

January 26, 2012

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This was cross-posted on our Expect[ed] Loss blog Credit risk ratings are becoming a risky business. Yesterday’s filing of the complaint against S&P (MHP) centers, in essence, on the allegation of false advertising.   Stepping in to this issue for a moment, one of the key defenses offered by the raters is that their ratings are […]

Rating Shenanigans

November 16, 2011

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The last couple of weeks have provided plenty of entertaining media coverage if you’re a follower of rating agency activities. First up, the Philadelphia Inquirer ran a story that suggests Collingswood NJ Mayor Jim Maley had failed to persuade Moody’s to adjust the borough’s rating.  Apparently, Moody’s had previously acknowledged that in its prior rating action, […]

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Rating Agency Refunds

September 23, 2011

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We have regularly written about the need to encourage rating agencies to be accurate and objective. Last week, the Reason Foundation submitted a comment letter to the SEC that suggests an interesting angle to promoting healthy ratings competition. First things first though.  We think it’s unhealthy to simply promote ratings competition.  That tends to lead […]

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Submission to Credit Rating Services Bill

August 18, 2011

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Our most recent regulatory submission is available by clicking here.  We delve into various rating agency conflicts that may hinder or impair the provision of objective credit ratings; and we offer ways to minimize or circumvent these “distractions.”

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South African Rating Agencies

August 4, 2011

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Some interesting / important excerpts from South Africa’s draft bill for credit rating agencies:   General duties 7.(1)  A credit rating agency must – … (j) ensure that it at all times has the necessary knowledge and experience to issue credit ratings and perform its credit rating services;   Methodologies, models and key rating assumptions […]

A Ratings-Free New World

July 18, 2011

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Reuters came out with an analytical article this morning which doesn’t bode well for the continued use of credit ratings.  (See Analysis: Investors break their bonds to ratings agencies.) It may be generally agreeable that several mistakes were made that (1) enabled credit raters to become too powerful, (2) allowed for their performance to continue unmeasured,  unmeasurable and unaudited, […]