There is room for debate over whether the errors of the ratings agencies stem from a weak analysis of complex new credit instruments, or from the conflicts induced when debt issuers pay for ratings and shop for the highest.
But there is no room for doubt that the ratings agencies dropped the ball. In light of this, should bank capital standards or countless investment guidelines be based on ratings?
Tuesday, August 28, 2007
Credit analysis
More discussion about the potential problems with relying on credit ratings agencies. Lawrence Summers argues:
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