Market Knows Best

I agree—how can the rating agencies’ evaluations be worthless and yet be the de-facto measurement for establishing bank capital measures?

 I agree—let’s have the ratings be allowable metrics for creditworthiness, but not the sole determinate of credit quality. They never were meant to be, or defined, that way. Politicians, regulators and investors had all better get to a common definition of what a rating tells us, before we all decide how they can be used.

Then, let’s allow market forces determine winners and losers.

Rating the Ratings Firms: An ‘I’ for ‘Ignore’Wall Street Journal, August 3, 2011

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