Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Display:
That makes sense until you assume that bankers have an incentive to lie to each other and to their investors and customers. Information is power, especially when it is strategically withheld from a negotiation. Credit agencies are a form of an attempt at transparency between two or more counter-parties who shouldn't trust each other.  There may be other ways of doing the same thing, but encouraging parties who should not trust each other to so is the purpose that must be fulfilled by any alternative.
by santiago on Mon Apr 26th, 2010 at 05:09:45 PM EST
[ Parent ]
In my experience, external ratings are just a way for bankers to be lazy and not properly do their risk analysis job, instead using socially and officially sanctioned off-the-shelf analysis.

There is nothing in agency ratings that banks (with its commercial and credit depts providing the requisite opposing perspectives) cannot do themselves correctly. In fact, using ratings means outsourcing the key function of the bank: risk assessment.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Wed Apr 28th, 2010 at 11:50:09 PM EST
[ Parent ]

Display:

Occasional Series