- Title Pages
-
Chapter 1 The Health Care Reform Legislation -
Chapter 2 The Simple Economics of Health Reform -
Chapter 3 The Economics, Opportunities, and Challenges of Health Insurance Exchanges -
Chapter 4 Can the ACA Improve Population Health? -
Chapter 5 Systemic Reform of Health Care Delivery and Payment -
Chapter 6 How Stable Are Insurance Subsidies in Health Reform? -
Chapter 7 Financial Regulatory Reform -
Chapter 8 Government Guarantees -
Chapter 9 How Little We Know -
Chapter 10 Finding the Sweet Spot for Effective Regulation -
Chapter 11 A Recipe for Ratings Reform -
Chapter 12 Should Banker Pay Be Regulated? -
Chapter 13 Fixing Bankers’ Pay -
Chapter 14 It Works for Mergers, Why Not for Finance? -
Chapter 15 Hedge Fund Wizards -
Chapter 16 Investment Banking Regulation After Bear Stearns -
Chapter 17 Why Paulson Is Wrong -
Chapter 18 Dr. StrangeLoan -
Chapter 19 Questioning the Treasury’s $700 Billion Blank Check -
Chapter 20 Auction Design Critical for Rescue Plan -
Chapter 21 A Better Plan for Addressing the Financial Crisis -
Chapter 22 Please Think This Over -
Chapter 23 Is Macroeconomics Off Track? -
Chapter 24 If It Were a Fight, They Would Have Stopped It in December of 2008 -
Chapter 25 Comment on Barbera -
Chapter 26 Pension Security Bonds -
Chapter 27 Carbon Taxes to Move Toward Fiscal Sustainability -
Chapter 28 Net Neutrality Is Bad Broadband Regulation -
Chapter 29 Trills Instead of T-Bills -
Chapter 30 The Google Book Settlement -
Chapter 31 The Stakes in the Google Book Search Settlement -
Chapter 32 The NFL Should Auction Possession in Overtime Games - Index
A Recipe for Ratings Reform
A Recipe for Ratings Reform
- Chapter:
- (p.89) Chapter 11 A Recipe for Ratings Reform
- Source:
- The Economists' Voice 2.0
- Author(s):
Charles W. Calomiris
- Publisher:
- Columbia University Press
This chapter considers the role of credit ratings agencies in the recent financial crisis. The evidence of rating agency failure shows up in inflated ratings and low-quality ratings. The inflation of ratings is the purposeful underestimation of default risk on rated debts. Low-quality ratings are ratings based on flawed measures of underlying risk. The recent collapse of subprime-related securitizations revealed both problems in the extreme. The elimination of the use of ratings for regulatory purposes would remove some of the incentive for ratings inflation, but, by itself, would not solve the problem of inflated and low-quality ratings. Any solution to the problem must make it profitable for rating agencies to issue high-quality, non-inflated ratings, notwithstanding the demand for low-quality, inflated ratings by institutional investors. This can only be accomplished by objectifying the meaning of ratings and linking fees earned by rating agencies to their performance. If fees are linked to the quality of objectified ratings, then ratings agencies would find it unprofitable to cater to buy-side preferences for inflated, low-quality ratings.
Keywords: credit ratings agencies, financial reform, financial regulation, credit risk, inflated ratings, low-quality ratings
Columbia Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.
Please, subscribe or login to access full text content.
If you think you should have access to this title, please contact your librarian.
To troubleshoot, please check our FAQs, and if you can't find the answer there, please contact us .
- Title Pages
-
Chapter 1 The Health Care Reform Legislation -
Chapter 2 The Simple Economics of Health Reform -
Chapter 3 The Economics, Opportunities, and Challenges of Health Insurance Exchanges -
Chapter 4 Can the ACA Improve Population Health? -
Chapter 5 Systemic Reform of Health Care Delivery and Payment -
Chapter 6 How Stable Are Insurance Subsidies in Health Reform? -
Chapter 7 Financial Regulatory Reform -
Chapter 8 Government Guarantees -
Chapter 9 How Little We Know -
Chapter 10 Finding the Sweet Spot for Effective Regulation -
Chapter 11 A Recipe for Ratings Reform -
Chapter 12 Should Banker Pay Be Regulated? -
Chapter 13 Fixing Bankers’ Pay -
Chapter 14 It Works for Mergers, Why Not for Finance? -
Chapter 15 Hedge Fund Wizards -
Chapter 16 Investment Banking Regulation After Bear Stearns -
Chapter 17 Why Paulson Is Wrong -
Chapter 18 Dr. StrangeLoan -
Chapter 19 Questioning the Treasury’s $700 Billion Blank Check -
Chapter 20 Auction Design Critical for Rescue Plan -
Chapter 21 A Better Plan for Addressing the Financial Crisis -
Chapter 22 Please Think This Over -
Chapter 23 Is Macroeconomics Off Track? -
Chapter 24 If It Were a Fight, They Would Have Stopped It in December of 2008 -
Chapter 25 Comment on Barbera -
Chapter 26 Pension Security Bonds -
Chapter 27 Carbon Taxes to Move Toward Fiscal Sustainability -
Chapter 28 Net Neutrality Is Bad Broadband Regulation -
Chapter 29 Trills Instead of T-Bills -
Chapter 30 The Google Book Settlement -
Chapter 31 The Stakes in the Google Book Search Settlement -
Chapter 32 The NFL Should Auction Possession in Overtime Games - Index
