Do the Credit Rating Agencies Deserve to Exist?
The article focuses on the significance of the credit rating agencies in the U.S. According to Maurice R. Greenberg of Starr and Co., the rating agencies are an integral component of the financial market. Their evaluations of credit risk are essential to many market participants who lack the resources or skill to make an independent evaluation. The problem lies in the method whereby rating agencies are paid of their services which has changed adversely over the years. Heiner Flassbeck of UNCTAD said that rating agencies normally respond that their ratings include disclaimers that clarify that they are paid by the companies they rate and that ratings are only opinions and not accurate predictions of the risk of a given instrument.
