Unchanged, unpunished, unrepentant, unreliable:: Ratings agencies – authorised to take money under false pretences


A closeup taken on December 31, 2011 in Lille, shows triple

The two biggest rating agencies refused to say sorry for their role in the financial crisis that began in 2007-08, instead telling MPs that investors should not pay too much attention to what they say.

"Ratings are opinions. They are one piece of important information which is available to the market and investors, but there are many other pieces of relevant information around about credit decision making," Mr Crawley said.

"We have been clear that we do not expect an individual investor, or at the other end of the spectrum a sophisticated asset manager, to rely solely on what we provide."

Mr Taylor said that although ratings were a good indication of long-term credit worthiness, there was no guarantee that agencies would not miss things in the future.

"We don’t have a crystal ball. We can’t predict the future.

Ratings agencies Moody’s and Standard & Poor’s refuse to apologise to MPs for financial crisis

The simple truth is that, ANYONE who thought that Rating Agencies actually could predict the future, should have their shoelaces and belt removed immediately! The more complex version…that is no less truthful…is that no-one can predict the future, even with access to an infinite amount of data about the present or immediate past.

I am not sure whether I find their arrogance or ignorance more offensive and, in the view of their role in the financial crisis, wonder why their “opinions” still so sought-after and costly?

At Ontonix we offer a credible, quantitative, cost effective [on-line] alternative:

Ontonix: Ratings – From an Opinion to Science

   

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Basel III: Why bother when the prequel was a “flop”…


…and the warnings weren’t heeded?

The prophetic words in this extract weren’t written post crash but in 2001! The full report can be read here. Of course this was not the only warning.

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Well before the banking collapse, the US National Academies/National Research Council and the Federal Reserve Bank of New York collaborated on an initiative to “stimulate fresh thinking on systemic risk”. The main event was a high-level conference held in May 2006, which brought together experts from various backgrounds to explore parallels between systemic risk in the financial sector and in selected domains in engineering, ecology and other fields of science. The resulting report was published late 2007 and makes very interesting reading.

So if the warnings were ignored…why and why have those who ignored them not been punished alongside those who, knowingly, flouted regulations in relentless pursuit of personal and Corporate reward at the expense of all else? 

WHO in their right mind thinks for one minute that more, different, regulation is ever (ever) going to be the answer???

More regulation is more complexity, more cost, greater fragility and less customer value…

Black Swans: A Corporate Governance “blind spot”

“…complexity breeds complexity, and is subject to diminishing  returns. Eventually the costs of increased complexity exceed the benefits” Prof John Kay

Regulators v Barbarian hordes