Rating Agencies and Reputational Risk
Maryland J. Business & Tech. Law, Vol. 4, p. 295, 2009
10 Pages Posted: 12 Mar 2009 Last revised: 12 Sep 2011
Date Written: March 12, 2009
This essay is a lightly-edited version of a talk given at the University of Maryland School of Law and the Journal of Business & Technology Law's Conference on the Subprime Meltdown in October 2008. It briefly reviews the reputational risk literature and applies it to the rating agency industry. In particular, it looks at three of the inputs into reputation - trust, transparency, and leadership - and evaluates how rating agencies fared in the period leading up to the subprime meltdown. It concludes that rating agencies did poorly when it came to all three of these reputational inputs.
Keywords: rating agencies, securitization, subprime, cdo, reputation, scandal, trust, transparency, leadership, mortgage-backed securities
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