Bankers and the rating agencies believed in financial alchemy.

There is widespread recognition that rating agencies have let down investors.

It should apply to all products that rating agencies evaluate.

The credit ratings agencies have been held accountable in two private suits.

Similarly, the rating agencies relied on information provided by the originators of synthetic products.

Rating agencies have been and should remain an important aspect of modern capital markets.

Are rating agencies and the markets really so ill informed about public spending?

Too often, the raters seem content to follow rather than lead sentiment.

Under the Senate s approach, regulators would create rules under which an independent regulatory board would choose raters.

Acknowledging that rating agencies were incompetent without doing anything to regulate them was inexcusable.

Rating agencies and shareholders are nervous when they hear that a stricter regulatory environment is not necessarily a disadvantage.

The major ratings agencies are increasingly complaining about the country s lack of a growth strategy and its outsize budget deficits.

On this view, if investors were able to take raters to court, raters incentives would improve.

Meanwhile, the financial sector failed to create products that would help ordinary people manage the risks they faced, including the risks of home ownership.

Rating agencies would consider this debt exchange a credit event, but only for a very short period a matter of a few weeks.

Indeed, the recent sudden rise in market volatility suggests that they are as bad as rating agencies at detecting the early warning signs of trouble.

They were so non transparent and complex that neither Wall Street nor the ratings agencies could properly assess them.

Credit rating agencies, which play an important role in modern capital markets, completely failed in the years preceding the financial crisis. What is needed is an effective mechanism for rating the raters.

Indeed, the rating agencies, whose malfunctions contributed to the crisis, must be regulated.

Ratings agencies had incentives to give good ratings to the high risk securities produced by the investment banks that were paying them.

Since each issuer represented a small fraction of their revenues, rating agencies were unwilling to compromise their reputation for the sake of any single issuer.

The rating agencies have long placed Greek debt deep in junk territory, and are now giving Portuguese and Irish debt the same status.

Since the crisis, rating agencies have been under attack, and major regulation, which could severely affect their business, has been discussed on both sides of the Atlantic.

Credit rating agencies, institutional investors, and asset managers are encouraged to see how such factors can be incorporated into their own risk models.

All of a sudden, issuers had much more influence on the rating agencies, which, like any good seller, were ready to bend a little not to alienate important customers.

As private rating agencies live on the fees they collect from rated companies, they cannot easily downgrade important clients or the assets they sell.

But what, then, were the credit rating agencies doing?

If things get too complicated for regulators, the job can always be turned over to the private sector, by relying on rating agencies and financial firms own risk models.

Only then will investors, rating agencies, and governments be able to plan over the medium to long term with the knowledge needed to ensure long term economic growth and stability.

Lehman Brothers had been awarded a high rating on the very eve of its collapse, yet now the rating agencies criticize governments that pulled the global economy back from the abyss for violating accounting principles.

The rating agencies miscalculated the value of asset backed securities.

And many observers within and outside the financial sector have begun to question the models upon which credit rating agencies, investment firms, and others rely to price the risks tied to such securities.

Even if this sounds unfair, it is logical to expect rating agencies, which had been lax in evaluating credit risk, now to be rigorous in assessing all forms of risk, including sovereign risk.

Guard posts for Agency

As Greek Prime Minister George Papandreou put it last week in his powerful letter to the head of the Eurogroup, Luxembourg s Prime Minister Jean Claude Juncker, The markets and rating agencies have not responded as we had all expected.

The corruption scandal at energy giant Petrobras is finally causing ratings agencies to reassess Brazil, but the move comes too late, and their downgrades probably will not be sufficient to reflect the true risk.

A low point perhaps one should say the height of ridiculousness was reached last year when rating agencies intensified their surveillance of government debt, and markets that had been victimized by the agencies incompetence and bad faith became fixated on their evaluations.

NEW YORK Recent market volatility in emerging and developed economies alike is showing once again how badly ratings agencies and investors can err in assessing countries economic and financial vulnerabilities.

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