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Mike Callan, at the time CEO of Ambac, asked the question: "Who voted them (the rating agencies) all this power?"
Jan 04 08:09 am
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All Comments by Tom Armistead »Robert Rosenkranz: Get the Rating Agencies Out of the Regulatory Process [View article]
Moody's in particular is aggravting: they recently did some deep thinking on financial guarantee insurance companies and concluded it is highly unlikely that there will ever again be any such thing as a triple A rated financial guarantor. One small item they left out of their article was any awareness of their own role in creating this whole sorry mess.
The practice of linking regulatory capital requirements or collateral posting requirements to credit ratings has created extreme instability and fragility in the financial system and needs to be stopped.