How to Reform the Credit-Rating Process to Support a Sustainable Revival of Private-Label Securitization ¤

IF 0.9 Q3 BUSINESS, FINANCE
R. Herring, E. Kane
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引用次数: 0

Abstract

US product-liability laws unwisely treat credit-rating organizations (CROs) as if they produce opinions rather than empirically-based economic research. In principle, trained professionals gather time-varying information ("financial news") and analyze it statistically to reduce it to a single dimension, allegedly for the benefit of investors, which, in turn, enables issuers to finance themselves at lower cost. In practice, the issuer-pays business model currently used for funding the production and distribution of ratings information creates an incentive to favor high-volume issuers by over-rating private-label securitizations. While the Dodd–Frank Act intensifies SEC oversight of CRO activity, the SEC has a history of being captured by regulatory clients. We argue that the fundamental solution is to create accountability in the ratings process so that private label securitizations can play a constructive role in the provision of credit and we go on to offer some conjectures about how this could be done.
如何改革信用评级程序以支持自有品牌证券化的可持续复兴
美国产品责任法不明智地将信用评级机构(cro)视为发表意见,而不是基于经验的经济研究。原则上,训练有素的专业人员收集时变信息(“金融新闻”),并对其进行统计分析,将其减少到单一维度,据称是为了投资者的利益,这反过来又使发行人能够以更低的成本为自己融资。在实践中,目前用于为评级信息的制作和分发提供资金的“发行者付费”商业模式,会通过对自有品牌证券的过高评级来鼓励大量发行者。虽然《多德-弗兰克法案》(Dodd-Frank Act)加强了SEC对CRO活动的监督,但SEC向来有被监管机构客户俘获的历史。我们认为,根本的解决方案是在评级过程中建立问责制,使自有品牌证券化在提供信贷方面发挥建设性作用,我们继续就如何做到这一点提出一些猜想。
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来源期刊
Quarterly Journal of Finance
Quarterly Journal of Finance BUSINESS, FINANCE-
CiteScore
1.10
自引率
0.00%
发文量
0
期刊介绍: The Quarterly Journal of Finance publishes high-quality papers in all areas of finance, including corporate finance, asset pricing, financial econometrics, international finance, macro-finance, behavioral finance, banking and financial intermediation, capital markets, risk management and insurance, derivatives, quantitative finance, corporate governance and compensation, investments and entrepreneurial finance.
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