Frank Partnoy (University of San Diego School of Law)
Abstract
The first part of the paper describes how over time credit rating agencies ceased to play the role of information intermediaries. Rating agencies did not provide information about the risk associated with the securitized instruments, but they simply enabled structurers to create and maintain tranches of these instruments with unjustifiably high credit ratings. The second part of the paper suggests how future policy may minimize overdependence on credit ratings, by removing regulatory licences and by implementing shock-therapy mechanisms to wean investors simple rating mnemonics.
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Publisher Info
Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number
2009.27.