{"id":136199,"date":"2019-06-24T12:00:06","date_gmt":"2019-06-24T11:00:06","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=136199"},"modified":"2019-06-24T09:14:03","modified_gmt":"2019-06-24T08:14:03","slug":"why-credit-rating-agencies-are-still-getting-away-with-bad-behaviour","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2019\/06\/why-credit-rating-agencies-are-still-getting-away-with-bad-behaviour\/","title":{"rendered":"Why Credit Rating Agencies Are Still Getting Away with Bad Behaviour"},"content":{"rendered":"
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Rating agencies have been at the centre of major financial crises.\u00a0 Shutterstock<\/p><\/div>\n

23 Jun 2019 – <\/em>International credit rating agencies have had their fair share of controversies<\/a> over the years. They have been at the centre of the major financial crises from the financial markets collapse of New York City in the mid-1970s<\/a>, the Asian financial crisis<\/a> of 1997 \u2013 1998, the Enron scandal<\/a> of 2001, to the global financial crisis of 2008<\/a>. All of these cost investors globally billions.<\/p>\n

Rating agencies are meant to give comfort about an issuer\u2019s ability to repay debt. Ratings are essential in determining the level of interest rate that a borrower must pay. Inaccurate ratings therefore distort both the prices of debt instruments and the interest rates payable on them. As history has shown, this creates asset bubbles that eventually burst, disrupting the functioning of financial markets.<\/p>\n

The three dominant international credit rating agencies \u2013 Standard & Poor\u2019s, Moody\u2019s and Fitch \u2013 have been accused of many faults including:<\/p>\n