Another Credit Rater Charged

May 1, 2012 by · Leave a Comment
Filed under: NRSRO 

D.C. still in the anointing of NRSROs.

Ratings matter, or they don’t.

The sad part is this wasn’t found during the application process.

So either the vetting was incomplete, or they saved this revelation to torpedo Egan.

You decide.

SEC Charges Credit Rater Egan-Jones – Reuters, April 24, 2012

SEC Denies Dagong Registration

April 29, 2011 by · Leave a Comment
Filed under: NRSRO, SEC 

China’s largest credit rating firm, Dagong Global Credit Rating Co. was denied status as an officially recognized bond rater in the United States. The Securities and Exchange Commission (SEC) explained that Dagong’s proposal to have China’s securities regulator review all correspondence between the SEC and Dagong would be inconsistent with federal securities law. Dagong argued that it was necessary to have their securities regulator vet and broker correspondence to insure no state secrets were inadvertently released.
The SEC also denied the application because “it does not appear possible at this time for Dagong to comply with the recordkeeping, production, and examination requirements of the federal securities laws.”
Dagong being a foreign agency did not influence the SEC’s decision. Fitch Ratings is a Nationally Recognized Statistical Rating Organization (NRSRO) and they are part of the French company. Likewise, DBRS Inc. is an NRSRO and they are Canadian.
Never before has a firm been denied NRSRO status. An NRSRO designation makes it possible for a firm’s ratings to be used as benchmarks in U.S. laws and regulations.

Noyer Attacks Rating Agencies

September 27, 2010 by · Leave a Comment
Filed under: EBC, NRSRO, The Rating Agencies 

When speaking in Seoul, South Korea, European Central Bank (ECB) policymaker Christian Noyer complained that central banks were too dependent on the jugments of credit rating agencies.

Noyer, a member of the ECB’s governing council and governor of the French central bank, told a Bank of Korea conference that the dependence on rating agencies is “absolutely unsatisfactory.” He explained that it was particularly a problem with sovereign debt. The types of bonds that central banks are allowed to use as collateral for lending don’t necessarily lend themselves to the models the ratings agencies use to evaluate creditworthiness.  He went so far as to say that the agencies are “plain wrong” in evaluating sovereign-credit risk.

They are “simply not giving information to the market but taking information from the market,” Noyer added.

I agree. Let’s de-certify the NRSRO designation and let professional investors be responsible for their own decisions.