Markets The Credit Rating Agencies

被引:240
作者
White, Lawrence J. [1 ]
机构
[1] NYU, Stern Sch Business, New York, NY 10006 USA
关键词
ECONOMICS;
D O I
10.1257/jep.24.2.211
中图分类号
F [经济];
学科分类号
02 ;
摘要
This paper will explore how the financial regulatory structure propelled three credit rating agencies - Moody's, Standard & Poor's (S&P), and Fitch - to the center of the U.S. bond markets - and thereby virtually guaranteed that when these rating agencies did make mistakes, these mistakes would have serious consequences for the financial sector. We begin by looking at some relevant history of the industry, including the series of events that led financial regulators to outsource their judgments to the credit rating agencies (by requiring financial institutions to use the specific bond creditworthiness information that was provided by the major rating agencies) and when the credit rating agencies shifted their business model from "investor pays" to "issuer pays." We then look at how the credit rating industry evolved and how its interaction with regulatory authorities served as a barrier to entry. We then show how these ingredients combined to contribute to the subprime mortgage debacle and associated financial crisis. Finally, we consider two possible routes for public policy with respect to the credit rating industry: One route would tighten the regulation of the rating agencies, while the other route would reduce the required centrality of the rating agencies and thereby open up the bond information process in a way that has not been possible since the 1930s.
引用
收藏
页码:211 / 226
页数:16
相关论文
共 48 条
[1]  
Acharya Viral V., 2009, Restoring Financial Stability: How to Repair a Failed System
[2]   A point-in-time perspective on through-the-cycle ratings [J].
Altman, EI ;
Rijken, HA .
FINANCIAL ANALYSTS JOURNAL, 2006, 62 (01) :54-70
[3]   How rating agencies achieve rating stability [J].
Altman, EI ;
Rijken, HA .
JOURNAL OF BANKING & FINANCE, 2004, 28 (11) :2679-2714
[4]  
[Anonymous], 2008, SUMM REP ISS ID COMM
[5]  
*BAS COMM BANK SUP, 2000, 3 BAS COMM BANK SUP
[6]   Differential properties in the ratings of certified versus non-certified bond-rating agencies [J].
Beaver, William H. ;
Shakespeare, Catherine ;
Soliman, Mark T. .
JOURNAL OF ACCOUNTING & ECONOMICS, 2006, 42 (03) :303-334
[7]  
Benmelech E., 2009, 15045 NBER
[8]   Deciphering the Liquidity and Credit Crunch 2007-2008 [J].
Brunnermeier, Markus K. .
JOURNAL OF ECONOMIC PERSPECTIVES, 2009, 23 (01) :77-100
[9]  
Calomiris C, 2009, ECON VOICE, V6
[10]  
Cantor Richard., 1994, FED RESERV BANK NEW, V19, P1