When the history of the credit bubble comes to be written, the list of guilty actors will be lengthy indeed: irresponsible banks, greedy borrowers, foolish speculators, incompetent regulators, the central bankers who kept rates too low for too long. Yet one group of players has been especially culpable in creating the current mess.
The credit rating agencies have played a pivotal role in the global debt markets for over thirty years, with the stamp of approval from Moody’s, Standard and Poor’s or Fitch a prerequisite for the sale of a bond. The agencies’ scale of ratings – from AAA for an issuer of unimpeachable creditworthiness, to the Cs and Ds for issuers of highly speculative or defaulted securities (often called “junk”) – form the basis of the capital markets.
2/2008
http://www.moneyweek.com/investments/stock-markets/the-great-credit-rating-scandal