Wed, 3 Nov 2010: Rating agencies lose credibility…



Rules set by the Basel Committee on Banking Supervision forced banks to increase the capital they held against assets that were downgraded by ratings companies, leading to fire sales. Commitments to investors also forced banks to post extra collateral against securitized debt when it was downgraded. The European Commission will publish proposals by March to curb the reliance of regulation on credit ratings. “We believe that investors should be free to choose the benchmark - including credit ratings - that best meets their needs while not mandating their use,” Chris Atkins, a spokesman for S&P, said in an e-mailed statement. Central banks should “reach their own credit judgments” on what assets to accept from fi... Read the rest of this entry »

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