Damning Report on Three Rating Agencies in US
SEC, the US regulator has issued an investigation report on the working of the leading rating agencies. The report raises questions on the working of the agencies on several critical operations. Rating agencies did not have adequate staff to handle the flow of assignments thus hampering the timeliness of the surveillance efforts. There was conflict of interest where in analytical managers were assigned the task of generating business and negotiating for the fee amount thus putting a question mark on the credibility of the ratings. Maintaining market share was a major consideration while devising rating methodology for risk assessment. Deatiled article can be read by clicking this link.
But from the Indian perspective a similar experience is also possible since all three rating agencies are principal owners of the leading Indian Rating agencies, CRISIL is owned by Standard & Poor, Moody’s has share in ICRA and Fitch has an independent operation.
