Cate Long

Egan Jones is Conflict Free? Not a Chance

The Credit Rating Agency Reform Act of 2006 (CRARA) allows all business models for raters.

Issuer pay, user pay or new business models that have yet to be defined.

The important part of this is the accuracy of the ratings as Mr. Brown says above.

One vital method of determining raters accuracy is the default rates for the various levels of ratings.

CRARA requires that raters publish these default statistics on annual basis.

SEC Chairman Cox announced last Friday that the Commission will go further and require some standardization of these stats.

So in the not too distant future we can begin to evaluate how all the raters are doing in terms of accuracy.

And parse out any conflicts of interest embedded in the accuracy.

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