Steve Alexander (MagicDiligence)

Don't Try to Fix the Rating-Agency Model: Get Rid of It

And replace them with what? You can't get rid of the existing system without a better replacement. The last thing you want is each individual investment house trying to rate debt on their own. Without the NRSROs, how does yield get determined? You don't want 20 investment banks rating debt - this is a formula for "rating shopping" and will lead to worse results. Look, these guys made some bad calls, no question. The instruments they were rating were fairly new and complex. You learn from mistakes, make adjustments, and move on. That's the solution.

Steve
magicdiligence.com