http://online.wsj.com/article/SB10001424052702303…
I was wondering why Rating Agencies even exist. As we saw last August, the downgrading of specific securities can cause serious repercussions. With this in mind, and the fact that this coming decision will probably screw us again, why do people rely on these places? Why don't individuals do their own research/analysis instead?
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To lower transaction costs by pooling research.
I'll SB that. Actually had me laughing out loud. Straight off of TFM.
Keep in mind that in order for them to exist, they need the gov approval.
And of course, the US gov won't approve an agency that will give him it's true rating, i.e. Junk.
they exist because of govt interference in the markets
http://en.wikipedia.org/wiki/Nationally_recognized_statistical_rating_o…
Hahaha my dad used to do that swagon. May have to during the next week before grad. Thank you.
I just find these companies to be a waste of power and in charge of too much economic sentiment.
Rating agencies came into existence at a time when information was hard to get therefore providing transparency to the debt market. This is no longer the case as information flow is more than accessible. However, as with anything with government interference nothing goes without being fucked. Rating agencies are mere quasi government organizations (NRSROs) and many shops already have solid internal credit teams. Get the government out of the market, and the rating agency model will wither away as it should.
For the apporpriation of blame and an excuse for not doing your job. "S&P had it at AA, it's not my fault." " Moody's didn't see it coming, how could i possible have known."
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