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The credit markets flow into 2009… many issues are rolling over from 2008…

There is general agreement that the major credit rating agencies misrated entire classes of securities leading up to the Credit Crisis of 2007-2008… CDOs were overrated and municipals were generally underrated…

The raters have undertaken some reforms and the SEC has issued new rules which restrict conflicts and increase the transparency of the work of the raters…

I’m not sure it’s enough to restore these firms to their central place in the credit pantheon… maybe they shouldn’t have a central place in the pantheon…  the angels hide their faces…

A review of the role of credit rating agencies in our financial system was mandated by Sarbanes-Oxley…

Six years later the place and influence of these gatekeepers is still being debated…

I’ll start collecting the news coverage, opinions, academic studies, and blog posts … here from Oxford Analytica via Seeking Alpha…

~~~~ “Despite the failure of Moody’s, Standard & Poor’s and Fitch to foresee the credit crisis, regulatory reforms seem likely to keep the current dependence on the major credit ratings agencies largely intact, according to Oxford Analytica.

Regulatory authorities in the United States and now the EU continue to regard more effective CRAs as part of the solution for poor investment decisions that failed properly to assess underlying risks, and not as a major part of the problem of offloading the necessary due diligence that should predate investment in complex financial products. So far, the major regulatory approach to credit ratings problems has focused on policing the credit rating agencies.

The weaker form of these proposals focuses on policing obvious conflicts. The stronger form might, in the case of the United States — which arguably should have a more stringent regulatory role, as the headquarters of the major CRAs — create a public role for rating debt, or shift current payment arrangements so that the users of credit ratings would pay for them, possibly through means of a subscription system.

A more effective approach to credit rating woes might be to improve accountability for investment decisions.

Measures to promote such goals would not necessarily eschew greater public oversight and regulation, in OxAn’s view. They might also include:

• easier access to lawsuits, both public and private, as a means of redress for poorly managed investment decisions; and
• elimination of undue reliance on credit ratings as a proxy for investment decisions, by stripping credit ratings references from securities regulations.” ~~~~