The challenge with ratings agencies

So what could possibly be wrong with having an “independent” ratings agencies which take money from the organizations they are rating?

Sub prime mortgages anyone?

Remember part of the challenge with the 2008 financial meltdown was that the rating agencies like Moody’s were rating these toxic financial products based on sub prime mortgages.

Kind of bloody obvious really - ratings agencies like Moody’s got most of their revenue from the banks who were making a lot of money from these dodgy financial products.

Not really a wonderful model eh?

How could we go back to fundamental principles and build out a new more transparent model?

See Credit rating agencies and the subprime crisis