The Role of Credit Rating Agencies in Responsible Finance
The Role of Credit Rating Agencies in Responsible Finance

Author: Daniel Cash

Publisher: Springer

Published: 2018-12-17

Total Pages: 133

ISBN-13: 3030037096

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This Palgrave Pivot aims to examine the bourgeoning relationship between the Principles for Responsible Investment and the Credit Rating Industry. Since May of 2016, when the partnership was initially publicised, the PRI have endeavoured to incorporate Credit Rating Agencies into its initiative via its ‘ESG in Credit Ratings Initiative’, and have been working diligently to find, and create common ground between Credit Rating Agencies and Institutional Investors seeking to be more forward-looking in their investment approaches. However, in recent years the ‘Big Two’ Credit Rating Agencies – Standard & Poor’s and Moody’s – have finally received record fines for their conduct in the run-up to the Financial Crisis. There is a need, then, to examine the incorporation of the Credit Rating Agencies into such a progressive initiative. To achieve this objective, this book examines the field of ‘responsible investing’, the credit rating industry, and the power dynamic that exists between the rating industry, investors, and the PRI (via its ‘Initiative’).

The Independence of Credit Rating Agencies
The Independence of Credit Rating Agencies

Author: Gianluca Mattarocci

Publisher: Academic Press

Published: 2013-10-22

Total Pages: 200

ISBN-13: 012404736X

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The Independence of Credit Rating Agencies focuses on the institutional and regulatory dynamics of these agencies, asking whether their business models give them enough independence to make viable judgments without risking their own profitability. Few have closely examined the analytical methods of credit rating agencies, even though their decisions can move markets, open or close the doors to capital, and bring down governments. The 2008 financial crisis highlighted their importance and their shortcomings, especially when they misjudged the structured financial products that precipitated the collapse of Bear Stearns and other companies. This book examines the roles played by rating agencies during the financial crisis, illuminating the differences between U.S. and European rating markets, and also considers subjects such as the history of rating agencies and the roles played by smaller agencies to present a well-rounded portrait. - Reports on one of the key causes of the 2008 financial crisis: agencies that failed to understand how to analyze financial products - Describes inherent business model and pricing conflicts that compromise the independence of credit rating agencies - Reveals how rating agencies large and small, regulatory bodies, and vested interests interact in setting fees and policies

Rating Agencies and Their Role During the Financial Crisis
Rating Agencies and Their Role During the Financial Crisis

Author: Constantin Jäkel

Publisher: GRIN Verlag

Published: 2011-07

Total Pages: 37

ISBN-13: 3640959647

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Seminar paper from the year 2011 in the subject Economics - Finance, grade: 1.3, Berlin School of Economics and Law, language: English, abstract: After the Asian crisis during the 1990s and the startling insolvencies of Enron and Parmalat, the recent financial crisis is one the most important trigger to raise doubt concerning the proper work of rating agencies. They are criticized because of their various conflicts of interest and obvious deficits in practicing their rating methods. The rating agencies should be jointly responsible for the emergence of the so-called bubble markets during the last couple of years. Because of these bubbles and their boom and burst effect, private as well as institutional investors lost enormous sums of assets and single countries were thrown into financial turmoil. Because of these facts, the discontent concerning the rating agencies grew. People took additional notice of their market power, which they only obtained because of their influence on the global capital flows and the use of ratings to regulate the financial markets. To particularize the issues, it is helpful to bring up the year 2007, when the delayed payments among the subprime loans became more frequent. This was due to the slower increase of the housing prices and the rising short-termed interest. Consequently, the rating agencies depreciated a lot of these structured financial products, many of which had received the highest seal of quality before (AAA). Those actions both led to a massive loss of confidence on the investors' side and a remarkable decline of liquidity. The former market of securitization products no longer existed. Influenced by this development and because they were considerable involved in this securitization business, a lot of banks also got into this downstream. In the first part of this term paper I will present some general facts about the rating agencies including their history of origins. Afterwards I will mention the process of rating and th

Credit Rating Agencies
Credit Rating Agencies

Author: Giulia Mennillo

Publisher:

Published: 2021-01-31

Total Pages: 240

ISBN-13: 9781788211925

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This short book introduces and explores the complex world of the credit rating industry: how it works, how it has evolved, the role it played in the financial crisis, and how it is regulated. Giulia Mennillo shows, as constitutive actors of global financial capitalism, CRAs have a social and political relevance that reaches well beyond finance.

To the Brink of Destruction
To the Brink of Destruction

Author: Timothy J. Sinclair

Publisher: Cornell University Press

Published: 2021-11-15

Total Pages: 227

ISBN-13: 1501760262

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To the Brink of Destruction exposes how America's rating agencies helped generate the global financial crisis of 2007 and beyond, surviving and thriving in the aftermath. Despite widespread scrutiny, rating agencies continued to operate on the same business model and wield extraordinary power, exerting extensive influence over public policy. Timothy J. Sinclair brings the shadowy corners of this story to life by examining congressional testimony, showing how the wheels of accountability turned—and ultimately failed—during the crisis. He asks how and why the agencies risked their lucrative franchise by aligning so closely with a process of financial innovation that came undone during the crisis. What he finds is that key institutions, including the agencies, changed from being judges to being advocates years before the crisis, eliminating a vital safety valve meant to hinder financial excess. Sinclair's well-researched investigation offers a clear, accessible explanation of structured finance and how it works. To the Brink of Destruction avoids tired accusations, instead providing novel insight into the role rating agencies played in the worst crisis of modern global capitalism.

The Financial Crisis Inquiry Report
The Financial Crisis Inquiry Report

Author: Financial Crisis Inquiry Commission

Publisher: Cosimo, Inc.

Published: 2011-05-01

Total Pages: 692

ISBN-13: 1616405414

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The Financial Crisis Inquiry Report, published by the U.S. Government and the Financial Crisis Inquiry Commission in early 2011, is the official government report on the United States financial collapse and the review of major financial institutions that bankrupted and failed, or would have without help from the government. The commission and the report were implemented after Congress passed an act in 2009 to review and prevent fraudulent activity. The report details, among other things, the periods before, during, and after the crisis, what led up to it, and analyses of subprime mortgage lending, credit expansion and banking policies, the collapse of companies like Fannie Mae and Freddie Mac, and the federal bailouts of Lehman and AIG. It also discusses the aftermath of the fallout and our current state. This report should be of interest to anyone concerned about the financial situation in the U.S. and around the world.THE FINANCIAL CRISIS INQUIRY COMMISSION is an independent, bi-partisan, government-appointed panel of 10 people that was created to "examine the causes, domestic and global, of the current financial and economic crisis in the United States." It was established as part of the Fraud Enforcement and Recovery Act of 2009. The commission consisted of private citizens with expertise in economics and finance, banking, housing, market regulation, and consumer protection. They examined and reported on "the collapse of major financial institutions that failed or would have failed if not for exceptional assistance from the government."News Dissector DANNY SCHECHTER is a journalist, blogger and filmmaker. He has been reporting on economic crises since the 1980's when he was with ABC News. His film In Debt We Trust warned of the economic meltdown in 2006. He has since written three books on the subject including Plunder: Investigating Our Economic Calamity (Cosimo Books, 2008), and The Crime Of Our Time: Why Wall Street Is Not Too Big to Jail (Disinfo Books, 2011), a companion to his latest film Plunder The Crime Of Our Time. He can be reached online at www.newsdissector.com.

Regulation and the Credit Rating Agencies
Regulation and the Credit Rating Agencies

Author: Daniel Cash

Publisher: Routledge

Published: 2018-08-06

Total Pages: 258

ISBN-13: 1351107895

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This book examines the transgressions of the credit rating agencies before, during and after the recent financial crisis. It proposes that by restricting the agencies’ ability to offer ancillary services there stands the opportunity to limit, in an achievable and practical manner, the potentially negative effect that the Big Three rating agencies – Standard & Poor’s, Moody’s and Fitch – may have upon the financial sector and society moreover. The book contains an extensive and in-depth discussion about how the agencies ascended to their current position, why they were able to do so and ultimately their behaviour once their position was cemented. This work offers a new framework for the reader to follow, suggesting that investors, issuers and the state have a ‘desired’ version of the agencies in their thinking and operate upon that basis when, in fact, those imagined agencies do not exist, as demonstrated by the ‘actual’ conduct of the agencies. The book primarily aims to uncover this divergence and reveal the ‘real’ credit rating agencies, and then on that basis propose a real and potentially achievable reform to limit the negative effects that result from poor performance in this Industry. It addresses the topics with regard to financial regulation and the financial crisis, and will be of interest to legal scholars interested in the intersection between business and he law as well as researchers, academics, policymakers, industry and professional associations and students in the fields of corporate law, banking and finance law, financial regulation, corporate governance and corporate finance.

Regulating Credit Rating Agencies
Regulating Credit Rating Agencies

Author: Aline Darbellay,

Publisher: Edward Elgar Publishing

Published: 2013-09-30

Total Pages: 292

ISBN-13: 085793936X

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øŠAline Darbellay analyzes the obvious system relevance of credit rating agencies in depth and assesses the possible options for regulatory responses to this systemic issue. Thereby, the book is based on a fruitful comparative legal approach and formul

Public Credit Rating Agencies
Public Credit Rating Agencies

Author: Susan K Schroeder

Publisher: Springer

Published: 2015-09-09

Total Pages: 317

ISBN-13: 1137359110

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In the aftermath of the Global Financial Crisis, there have been many criticisms weighed against private credit rating agencies. Many claim they only exacerbate financial market volatility by issuing faulty public statements, ratings warnings, and downgrades. This instability increases the uncertainty in business environments and weakens the pace of business investment. Their rating changes also prompt national governments to reduce their spending at a time when fiscal expenditures are crucial for economic recovery. Public Credit Rating Agencies argues for the creation of national public credit rating agencies, offering the first in-depth discussion of their implied role and function operating alongside private agencies. Schroeder provides an up-to-date overview of the ratings industry and the government bodies that monitor its activities. She suggests that the proper implementation of public credit rating agencies will promote the stability of lending, further development and adaptation of new technology, and increase labor productivity and the profitability of new investment in businesses. Finally, this book clarifies the inconsistencies that have surfaced between public budgeting and a rating agency's evaluation of national budgets.