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Financial Rating Agencies are at Fault
The rating agencies credibility needs to be challenged
as a result of Financial Crisis |
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The establishment of
financial rating agencies was a safeguard for
investors who could get reliable information and
accounting of financial firms. However, the rating
agencies credibility needs to be challenged. The
recent demise of major firms such as Bear Sterns,
AIG and Lehmann were not in any rating downgrade
�free fall� from a rating agency. This puts into
perspective the lack of �stealth� rating capability
of these agencies. The blame or fault is not the
concern. What is troubling is that the process is no
longer reliable or nimble enough in this Global warp
speed financial market system we are in today.
Today�s rating agency
hearings are taking place and the �gut� reaction is
once again the U.S. is mired in old school
bureaucratic process which usually ends up with no
significant outcome. In fact they usually result in
less transparency for the investor although this
current day overused word TRANSPARENCY will be
communicated in nauseaum. The good news is that
opportunity exists for those who could provide
rating information that is timely and more
streamlined. In the meantime, the rating info is
less important in the analyst overall financial
research of firms. This also is the concern of
venture capital and foreign investors. The rating
agency firms reputation are at stake, although, the
perception in the court of public opinion is and has
been shaky at best. Furthermore, these agencies
could have been a safeguard against the free fall in
the Housing bubble. But they failed to raise the
flag. Credibility in financial reporting is
essential for the U.S. we are not a banana republic.
Our financial
institutions are credible and many U.S firms provide
financial security and trust for their clients. Many
contracted agencies are paid to evaluate businesses
performance and the spin is usually positive and not
very forthcoming with the bad news. They are used
more to justify corporate fiefdoms. Akin to today�s
society where all teams win get trophies etc�.. Not
conducive for winning in the NEW AGE business
competition current and future generations will be
faced with.
The International
Global market is a game changer for the old boy
business as usual rating agency game plan.
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