Thursday, January 31, 2008
It is silly rules protecting Fitch, Moodys and S&P which led to this
“In the truly procompetitive and best case, not only would the term ‘NRSRO” be dropped, but the regulatory requirement of designation of approved rating agencies itself would be eliminated. That requirement has produced unintended effects never imagined when it was introduced in 1975, and it is time for it to retire. “In its place, the responsibility to choose among rating agencies and their services would belong to investors, financial firms, securities issuers, creditors, and other users of ratings --in short, to the market. Imagine that! “Under these desirable circumstances, a competitive market test will determine which rating agencies turn out to be ‘widely accepted by the predominant users of securities ratings,’ and competition will provide its normal benefits of better prices"