Presentation on credit rating agencies delivered by Lisa Lindsley to staff of House of Representatives as part of Americans for Financial Reform briefing on December 4, 2009
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Credit Rating Agencies Lindsley
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2. Traditional Rating Company Debt Issues Securities Rating Agency Assigns Rating Issuer pays rating agency Banks underwrite debt for a fee Banks purchase debt from company $ $ Pension funds, mutual funds invest in debt Banks sell debt to investors $
5. Monopoly problems “… it could be structured by cows and we would rate it.” “ even bigger monster – the CDO market. Let’s hope we are all wealthy and retired by the time this house of cards falters.”
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8. Changing the Business Model Company Debt Issues Securities Rating Agency Assigns Rating Banks underwrite debt for a fee Banks purchase debt from company $ $ Pension funds, mutual funds invest in debt Banks sell debt to investors $ Should Investors Pay? Should SEC select agency? Should NRSRO be government-run?