How to Fix the Credit-Rating System

By Clive Crook – The credit-rating industry has been one of the more successful fugitives from stricter regulation since the financial crisis. The companies’ failure to do their appointed jobs was as spectacular as that of the banks, and at the very center of the whole mess — yet the regulatory follow-through has been minimal.

The whole idea of structured finance is to repackage payments into safe and less safe instruments so that investors with different appetites for risk and return can be sold the blend they want. The problem is, this additional complexity makes it easier to make mistakes. And sometimes those mistakes aren’t accidents. more>


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