Joanna Faith reports on the failure of the ratings agencies in the financial crisis and the need for a complete overhaul of the industry
In the 21 June issue of Investment Week we featured an article from Tony Angel, head of Europe, Middle East and Africa at Standard & Poor’s. In the article, Angel said that during the financial crisis, credit ratings had “stood up well in the tough conditions and fulfilled their role as benchmarks of default risk”. He backed up his comments with empirical data demonstrating the performance of the ratings agency. However, he acknowledged the performance of ratings in two specific areas – recent US residential mortgage-backed securities (RMBS) and collateralised debt obligations (CDOs) ...
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