Financial Regulatory Forum

ANALYSIS-Credit rating agencies should not be dupes

By Dan Wilchins

NEW YORK, May 13 (Reuters) – New York Attorney General Andrew Cuomo is looking at whether investment banks duped credit rating agencies, but a bigger question is why the rating agencies failed to prevent the financial meltdown.

Banks may indeed have misled Moody’s Investors Service, Standard & Poor’s, and Fitch into giving higher ratings than some securities really merited, but rating agencies should have done more to avoid being fooled, critics said.

Until the structural problems with rating agencies are fixed, new credit bubbles will likely be inflated.

Those problems may be closer to getting fixed. The U.S. Senate voted on Thursday to impose tighter regulations on credit rating agencies, taking steps including letting regulators decide which agency will assign ratings to an issuer.

That Senate proposal follows years of hearings into problems at rating agencies, which essentially assign grades to bonds to help investors evaluate the securities.

U.S. Senate panel releases documents on credit raters’ role in Abacus, financial crisis

The Senate Permanent Subcommittee on Investigations released a trove of internal messages and other exhibits from its look at the role credit-rating agencies played in the financial crisis, including several related to the Goldman Sachs Abacus trades at the heart of SEC fraud charges against the bank .  Reuters links to full file of exhibits.

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ANALYSIS-German ratings agency idea a tough challenge

LONDON, Oct 28 (Reuters) – The German government’s idea for a new European-based credit rating agency comes at a vulnerable time for the tarnished sector but such a body will have to offer more than a copycat service if it is to succeed.

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Moody’s secretive nature described to Congress

moodys    By Rachelle Younglai
    WASHINGTON, Sept 30 (Reuters) – Lawmakers slammed a “culture of secrecy” at Moody’s <MCO.N> and expanded a credit ratings industry probe to find out why securities regulators ignored a tip that Moody’s managers routinely put profits above
ratings quality. (more…)

Congress to examine SEC failure to probe warnings on Moody’s

Committee Chairman Edolphus Towns (D-NY) (C), ranking member Rep. Darrell Issa (R-CA) (L) and Rep. Dennis Kucinich (D-OH) (R) talk to reporters after a hearing of the House Oversight and Government Reform Committee on Capitol Hill in Washington, June 25, 2009.    REUTERS/Jonathan Ernst    (UNITED STATES POLITICS BUSINESS) (FILE) WASHINGTON, Sept 30 (Reuters) – A congressional panel will expand its examination of credit rating agencies to look at why U.S. securities regulators ignored warnings from former Moody’s Corp executives about the company’s weak compliance department and ratings process.

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US Treasury warns on credit ratings regulation

WASHINGTON, Aug 5 (Reuters) – The Obama administration is resisting calls to get involved with ensuring that credit ratings are reliable and said on Wednesday this would force investors to rely even more on the ratings. (more…)

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