Conflicts Of Interest's Management Within Credit Rating Agencies

Date Added: Oct 2009
Format: PDF

The recent financial crisis triggered by the spectacular drop of the prices of financial instruments backed by subprime loans brought back into spotlight the role played by the Credit Rating Agencies (CRAs) in the structured finance field. Their importance grew exponentially along with financial globalization and received a substantial support from the Basel Committee II whose newest regulations regarding the risks involved by certain financial assets were tied to ratings issued by specialized institutions. Throughout the time, the regulators took appropriate measures to ensure that the problems raised by the rating activity are avoided - loose competition, lack of transparency, potential conflicts of interest and rating-depending regulation.