Ratings Agency

  • Ratings Agency

    Ratings Agencies Incentivized By Incentives, Part 2

    A thing about credit ratings is that issuers pay for ratings, and the issuers who pay more get better ratings. This is a problem that many people want to solve either by the obvious approach of having someone else pay for ratings or by the fancier approach of having issuers pay for ratings but not […]

    / Nov 18, 2011 at 12:45 PM
  • News, Ratings Agency

    What Are You Paying Ratings Agencies Zero Dollars For, Anyway?

    Fitch released a report today saying “ohmygod banks Europe” and the market went down and maybe there’s a causal link, whatever. The report mostly takes notice of US banks’ European exposures in general, and the mystery of net versus gross derivatives exposure in particular, in which one asks “if Bank A sells CDS on $100bn […]

    / Nov 16, 2011 at 7:14 PM
  • Ratings Agency

    The Way Forward For Credit Ratings

    Long before we were told by the Securities and Exchange Commission that short-sellers and rumor mongers were behind our credit market crisis, blame was being heaped on the ratings agencies. While we’ve since moved on here in these United States, attention in Europe has largely remained focused on the ratings agencies. The Europeans are proposing […]

    / Jul 28, 2008 at 3:15 PM
  • Banks, Lehman, Merrill Lynch, Morgan Stanley, Ratings Agency, Standard & Poor's

    S&P Slashes Ratings On Lehman, Merrill and Morgan Stanley

    So maybe trouble at Lehman Brothers isn’t just short-sellers spinning a web of financial panic after all. Standard & Poor’s cut the ratings of Lehman Brothers, as well as Merrill Lynch and Morgan Stanley today. Counterparty credit ratings, which have been getting a lot of attention lately, were one prong of the S&P credit analyst […]

    / Jun 2, 2008 at 1:59 PM
  • Big Idea, Ratings Agency

    Rethinking The Ratings Agency Scandal, Part IV: Homogenous Ratings Labels For Heterogeneous Credits

    At the most basic level, the critique of the ratings agencies seem to be that by assigning triple A ratings to riskier credit products, they concealed risk. This dismays the ratings agencies who believe that they never claimed every kind of credit product that bore the same label carried the same risk. “Credit ratings are […]

    / Feb 12, 2008 at 12:46 PM
  • Big Idea, Ratings Agency

    Rethinking The Ratings Agency Scandal, Part III: Evidence Of Error Discount Pricing

    Ratings agencies are the folks everyone has learned to love to hate as credit markets have deteriorated. They stand accused of damaging Wall Street investors by negligently or corruptly assigning unduly high credit ratings to collateralize debt obligations. But was Wall Street really fooled by the ratings agencies? There is strong evidence that suggests investors […]

    / Feb 12, 2008 at 9:33 AM
  • Big Idea, Ratings Agency

    Rethinking The Ratings Agency Scandal, Part II: Cui Bono?

    We began yesterday by announcing that the ratings agency scandal was showing signs of becoming overwrought. Ratings agencies, including S&P, Moody’s Investors Service and Fitch Ratings, have been criticized and mocked in recent months as credit markets have deteriorated. More recently, regulators and prosecutors have announced investigations into the role of the ratings agencies in […]

    / Feb 12, 2008 at 8:05 AM
  • Big Idea, Ratings Agency

    Is The Ratings Agency Scandal Overwrought?

    We’ve joined the cacophonous critical chorus on the failure of the ratings agencies to anticipate the risks involved in structured credit products and the much mocked reform proposals. But conversations we had over the weekend have us wondering whether this scandal might have become overwrought. At the heart of the scandal is the idea that […]

    / Feb 11, 2008 at 8:57 AM
  • Ratings Agency

    Investigating The Ratings Agencies

    “Too little. Too late.” That’s how New York Attorney General Andrew Cuomo described the reforms proposed by Standard & Poor’s and Moody’s Investors Service in the wake of the subprime debt ratings catastrophe. Both S&P and Moody’s have recently announced plans to strengthen their ratings system in an attempt to restore their credibility and fend […]

    / Feb 7, 2008 at 4:44 PM

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