From Today’s Papers…

October 1, 2009 by · Leave a Comment
Filed under: The Rating Agencies 

There seem to be two issues when it comes to the NRSROs.
1. There is a conflict of interest in an issuer pays model.
2. Should there even be an NRSRO designation?

These two issues are centered around whose fault this all is, and who we can trust to measure credit quality.

The exisiting ratings agencies might bear some blame, but there is no comprehensive plan in place to fill their enormous role in financial markets. Could we really just delete them from the statutes?

Just as imnportant, there is a third, unexplored area the has received no attention.
What do we do about the billions of already downgraded bonds that can’t be upgraded, ever, that will mature in the next 30 years?
I contend we need to repair the ratings scale to decribe the magnitude of loss, and more accurately depict the true value.
How to clean up the existing mess is just as important as preventing the next one.

This needs attention.

Read the article below for further exploration of this topic:

Protecting the Credit RatersWall Street Journal, October 1, 2009

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