tag:blogger.com,1999:blog-4039434.post197625926906882110..comments2024-02-26T06:46:53.171-05:00Comments on Rajiv Sethi: Rating the AgenciesRajivhttp://www.blogger.com/profile/13667685126282705505noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-4039434.post-57291377954313885572011-08-10T16:52:03.995-04:002011-08-10T16:52:03.995-04:00Todd, I think that the conflicts of interest that ...Todd, I think that the conflicts of interest that arose with structured products do not arise with sovereign ratings. There may be other conflicts - for instance to the desire to protect the monopoly power granted by the SEC - but this would induce the agencies to be excessively optimistic about US credit risk, and cannot therefore account for the downgrade (see Andrew Gelman's comment in the update to my post).Rajivhttps://www.blogger.com/profile/13667685126282705505noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-59401092808565089342011-08-10T11:03:57.191-04:002011-08-10T11:03:57.191-04:00Excellent. And I have a question. Can you respond...Excellent. And I have a question. Can you respond to the argument that S&P's sovereign debt department is exempt from the strictures you cite?Todd Gitlinhttps://www.blogger.com/profile/14975842773390814290noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-91941722650438715212011-08-08T16:05:29.030-04:002011-08-08T16:05:29.030-04:00David, setting capital requirements based on agenc...David, setting capital requirements based on agency ratings didn't work out too well either this time around. I think that there's an illusion of precision with these ratings that is dangerous, especially with structured products being "rated on the edge". But I don't know what the alternative would be. You know more about this issue than just about anyone, so I'd like to hear your thoughts, either here or on your blog.Rajivhttps://www.blogger.com/profile/13667685126282705505noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-63272702586294352672011-08-08T13:01:09.847-04:002011-08-08T13:01:09.847-04:00How will the regulators evaluate credit risks with...How will the regulators evaluate credit risks without the rating agencies?<br /><br />The insurance industry tried doing it themselves, and failed badly. The insurance regulators are more competent (less captured) than the banking regulators. I don't think the banking regulators could do it.David Merkelhttps://www.blogger.com/profile/05073877918072914309noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-78271339520502988442011-08-07T15:17:41.050-04:002011-08-07T15:17:41.050-04:00excellent as usualexcellent as usualOwen Painehttps://www.blogger.com/profile/13675803406994867138noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-62786103996941100552011-08-06T14:55:11.706-04:002011-08-06T14:55:11.706-04:00well said
- @JakeTamarkinwell said<br /><br />- @JakeTamarkinJake Tamarkinhttps://www.blogger.com/profile/13693873539630295139noreply@blogger.com