by Ian Blohm, Oriental Review
Despite attempts to portray the work of the “big three” as globally oriented, the rating agencies maintain a close link to the US financial institutions. The 2008 economic crisis sent their reputations reeling. Now the global market for making ratings needs to be de-monopolized and equipped with new, transparent tools for working with risk.
Currently, Fitch, Standard & Poor’s, and Moody’s enjoy almost complete legal immunity for their evaluations and are guaranteed high profits, regardless of the consequences. According to the French edition of Le Monde, between 2000 and 2007, Moody’s earnings quadrupled, thanks to CMBS, ABS, CDO, and other securities that had become the main source of the company’s financial gains, with a profitability margin of 52%. Unfortunately, accurate data on S&P and Fitch are not published, although it would be interesting to look at the accounting records of these organizations that insist on full transparency for everyone but themselves.