User:Nick Gardner /Sandbox: Difference between revisions
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http://v3.moodys.com/researchandratings/methodology/003006001/rating-methodologies/methodology/003006001/4294966628/4294966848/0/0/-/0/rr Moodys rating methodologies | http://v3.moodys.com/researchandratings/methodology/003006001/rating-methodologies/methodology/003006001/4294966628/4294966848/0/0/-/0/rr Moodys rating methodologies | ||
Failures | |||
Enron Orange County California, Mercury Finance, Pacific Gas & Electric, Enron, WorldCom, Delphi, General Motors and Ford. | |||
There is evidence that all types of rating announcements – outlooks, reviews and rating | There is evidence that all types of rating announcements – outlooks, reviews and rating | ||
changes, whether positive or negative – have a significant impact on | changes, whether positive or negative – have a significant impact on the risk premiums on [[bond]]s (as reflected in the prices of [[credit default swap]]s) | ||
<ref>[http://papers.ssrn.com/sol3/papers.cfm?abstract_id=991821 Fabian Dittrich: ''The Credit Rating Industry: Competition and Regulation", Inaugural dissertation zur Erlangung des Doktorgrades der Wirtschafts- und Sozialwissenschaftlichen Fakultät der Universität zu Köln 2007]</ref> | <ref>[http://papers.ssrn.com/sol3/papers.cfm?abstract_id=991821 Fabian Dittrich: ''The Credit Rating Industry: Competition and Regulation", Inaugural dissertation zur Erlangung des Doktorgrades der Wirtschafts- und Sozialwissenschaftlichen Fakultät der Universität zu Köln 2007]</ref>. | ||
Revision as of 12:09, 1 March 2010
http://v3.moodys.com/researchandratings/methodology/003006001/rating-methodologies/methodology/003006001/4294966628/4294966848/0/0/-/0/rr Moodys rating methodologies
Failures
Enron Orange County California, Mercury Finance, Pacific Gas & Electric, Enron, WorldCom, Delphi, General Motors and Ford.
There is evidence that all types of rating announcements – outlooks, reviews and rating changes, whether positive or negative – have a significant impact on the risk premiums on bonds (as reflected in the prices of credit default swaps) [1].
Statement by
Lawrence J. White*
for the
“Roundtable to Examine Oversight of Credit Rating Agencies”
U.S. Securities and Exchange Commission
Washington, DC
April 15, 2009
[1]
(Statements about history)
[2] How and Why Credit Rating Agencies are Not Like Other Gatekeepers Frank Partnoy University of San Diego School of Law "Credit rating agencies are not widely respected among sophisticated market participants," Since 1973 credit ratings have been incorporated into hundreds of rules, releases, and regulatory decisions, in various substantive areas including securities, pension, banking, real estate, and insurance regulation
FINANCIAL GATEKEEPERS: CAN THEY PROTECT INVESTORS?, Yasuyuki Fuchita, Robert E. Litan, eds., Brookings Institution Press and the Nomura Institute of Capital Markets Research, 2006 San Diego Legal Studies Paper No. 07-46
The Paradox of Credit Ratings Frank Partnoy
U San Diego Law & Econ Research Paper No. 20 [3]
Numerous academic studies show that ratings changes lag the market
and that the market anticipates ratings changes.3 The rejoinder to these studies – that
ratings are correlated with actual default experience – is misplaced and inadequate,
because ratings can be both correlated with default and have little informational value.
Accordingly, such correlation proves nothing. Indeed, it would be surprising to find that
ratings – regardless of their informational value – were not correlated with default
- There are two superpowers in the world today in my opinion. There’s the
United States and there’s Moody’s Bond Rating Service. The United States can destroy you by dropping bombs, and Moody’s can destroy you by downgrading your bonds. And believe me, it's not clear sometimes who's more powerful. (Thomas L. Friedman, in an interview ith Jim Lehrer on Newshour, PBS television, Feb. 13, 1996).