Markets

David Einhorn on rating agencies and risk management

David Einhorn, founder of the $6bn Greenlight Capital fund and author of "Fooling Some of the People All of the Time, a Long Short Story", says the role of rating agencies has proven to been very dangerous and "ideally that needs to be changed". He thinks investors should pay for ratings, and that they should lose their special status with regulators. Mr Einhorn also believes the basic risk management and capital management of the large financial institutions is "quite flawed" and it needs to be changed. Mr Einhorn is particularly critical of the Value-At-Risk (VAR) model which underpins many risk-management models.