The historical insight is edifying to say the least. Seeing the rating agencies’ 2-decade long (at least) record of poor insight is illustrative of the fact these problems are not new. It’s also interesting to contrast the. U.S. federal government’s imposition coerced-inflexibility of one of the most important industries in the market (credit ratings) with their imposition of coerced splintering of the market in other industries such as telecommunications.
What principle could justify these two equal yet opposite approaches, other than power for its own sake?
I asked Dr. Brook this question because Moody’s Investors Service is the ratings agency that issued crediting/bond ratings for the City of Long Beach (NY), the city I cover for my news site. Moody’s gave the city a Triple A rating just before its finances tanked last fall.
3 Comments to “Yaron Answers: What Role Did Credit Rating Agencies Play In The Financial Crisis?”
The historical insight is edifying to say the least. Seeing the rating agencies’ 2-decade long (at least) record of poor insight is illustrative of the fact these problems are not new. It’s also interesting to contrast the. U.S. federal government’s imposition coerced-inflexibility of one of the most important industries in the market (credit ratings) with their imposition of coerced splintering of the market in other industries such as telecommunications.
What principle could justify these two equal yet opposite approaches, other than power for its own sake?
Thank you for answering my question, Dr. Brook. I appreciate your insights.
I asked Dr. Brook this question because Moody’s Investors Service is the ratings agency that issued crediting/bond ratings for the City of Long Beach (NY), the city I cover for my news site. Moody’s gave the city a Triple A rating just before its finances tanked last fall.