A SYMPOSIUM OF VIEWS
THE MAGAZINE OF
INTERNATIONAL ECONOMIC POLICY
888 16th Street, N.W.
Washington, D.C. 20006
Do the Credit
Deserve to Exist?
The proverb says it’s no use
locking the barn door after the
horse is gone. But even if the door
to the credit rating
agencies can’t be
closed, should these
many critics argue?
Do the rating agencies elevate or
add to risk? Is the charge credible
that these institutions have never
been ahead of the curve in
predicting the bursting of an
economic or financial
bubble? Should the U.S.
Securities and Exchange
Commission and similar
disassociate from the
agencies in the evaluation of risk?
Or are effective reforms possible?
Fourteen distinguished experts rate the raters.
THE INTERNATIONAL ECONOMY
Yes, but eliminate
They should be
their conflicts and
taken over by a
have them report
to the SEC.
MAURICE R. GREENBERG
Chairman and CEO, C. V. Starr and Company
Director, Division on Globalization and Development
Strategies, UNCTAD, Geneva
he rating agencies are an integral component of
the financial market. Done properly, their evaluations of credit risk are essential to many market
participants who lack the resources or skill to make an
The problem lies in the method whereby rating
agencies are paid for their services which has changed
adversely over the years. Once rating services sold their
ratings to the purchasers of securities and were viewed
as independent evaluators of risk. As securities became
more complex, investment banks wanted to know in
advance what would be the rating of the security before
bringing it to the market. The rating agencies became
engaged in the structuring of the securities...