“Credit rating agencies were key accomplices to Wall Street’s too-big-to-fail banks in creating, selling and distributing trillions of dollars of worthless securities, which caused the financial collapse and economic crisis. Without such despicable actions, which put millions of dollars into the pockets of the executives working at the credit rating agencies, those worthless securities could not have been sold and the financial crisis would likely not have happened,” said Dennis Kelleher, President of Better Markets, an independent nonprofit organization that promotes the public interest in the financial markets.
“It is a gross failure that the same credit rating system that enabled the financial crisis still exists largely unchanged today, almost five years later. That system remains fatally flawed and full of conflicts of interest, where maximizing fees, market share and bonuses remain overwhelmingly powerful incentives. An entirely new system with an independent assignment system must be put in place by the SEC without delay,” said Mr. Kelleher.
“It must never be forgotten that the last financial crisis will cost this country more than $12.8 trillion, as a recent Better Markets’ analysis demonstrated, and the next one will almost certainly cost more. Preventing this is the duty of all elected officials and a key to doing that is reforming the credit rating agency system now,” Mr. Kelleher concluded.
Better Markets’ Securities Specialist, Steve Hall, will advocate for this new assignment system this morning at the SEC sponsored Roundtable on Credit Rating Agencies. His full opening statement detailing this new system and why it is so important is available here.