An Alternative to the Ratings Agencies
The news that the U.S. Justice Department has filed civil fraud charges against the largest credit ratings agency, Standard & Poor’s, for behavior that it alleges contributed to the cataclysmic financial crisis will be cheered by millions who have suffered from the subprime mortgage disaster.
But will a lawsuit, successful or not, help correct the problems of the major ratings agencies that have failed to pass the test of professional credibility, upon which senior members of the financial sector on Wall Street relied?
While many people in the financial sector were blinded by greed to the need for deeper analysis and due diligence on what were later exposed as unworthy credit instruments, there remains a potentially more destructive role these agencies play: the rating of sovereign debt.… Seguir leyendo »