Ratings agencies Market turmoil in the wake of the subprime mortgage crisis has again raised questions about the accuracy of agencies’ ratings and conflicts of interest
The top three US credit ratings agencies are accused of ‘wreaking havoc’ on US financial markets by providing inflated ratings and costing state funds hundreds of millions of dollars
Move follows tougher oversight of agencies
No exemption from legal action
Second-opinion ratings planned
Agencies could be made jointly liable
Moody’s, the credit rating agency, said it was beginning disciplinary proceedings against some of its staff as it admitted it had incorrectly rated about $1bn of complex debt securities due to a computer error
When bankers at groups such as ABN Amro first dreamed up the concept of constant proportion debt obligations almost two years ago, many analysts regarded the idea as the epitome of a credit bubble gone mad
In spite of widespread gnashing of teeth over their role in the crisis, Moody’s and S&P are once again on the up
There remains enormous focus on the question of the extent to which rating agencies should be liable for their actions, writes Aline van Duyn
The agencies are resisting bans on the issuer-pays model, in spite of the perverse incentives that model presents as long as issuers have a greater need for good ratings than for accurate ones
Paying analysts on the accuracy of their stock recommendations and research quality improved performance, and you get what you pay for from the ratings agencies too, writes Sallie Krawcheck
Ratings agencies come under ever closer scrutiny. As regulatory pressure increases on debt’s arbiters of risk, the confidence on which the industry depends is in short supply
Although two of the agencies’ biggest markets are shrinking, investors seem to like their stocks
