Saturday, October 29, 2011

The Mootness Of Rating Agencies

I have always wondered about this. But here is a great article about how "rating agencies are incentivized by incentives":
“Credit-rating inflation is correlated with the asset classes that generate the most revenue for the raters,” said Jess Cornaggia, who has presented research at the SEC and the Commodity Futures Trading Commission. …

I always knew there was something wrong with the incentive structures of credit rating agencies. In fact, I also think there are possible issues with the incentive structure for auditors as well.

No comments:

Post a Comment