A Critical Study of Credit Rating Agencies (CRA) and Position In the Financial Crisis of 2007-2009

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The scores offered by the credit rating agencies are regarded during providing finance to any organisation. Before granting loans or providing financial assistance, the loan issuing bodies evaluate the capability of the company to make timely payments. During the period of global economic crisis in 2007, the scores provided by the credit rating agencies became more important and these agencies provided nearly accurate scores that helped the companies to get finance. Moreover, the credit providing companies were also aware regarding the financial position of the companies. Utilizing management reports, listening to existing scholastic writing and meetings, this exposition looks for firstly to assess the degree to which it is reasonable to accuse the FICO score organizations for the introductory monetary situation that prompted the budgetary emergency. From that point, it tries to answer regardless of whether it is still suitable to reprimand them for the way of the worldwide money related emergency, as it exists today. The research is important as evaluating the CR agencies and their position in the fiscal crisis of 2007-2009 is of utmost importance. The research questions are:

What was the reason behind the financial crisis of 2007-2009?

To what extent was the credit rating agencies affected by the financial crisis of 2007-2009?

Reference List

International Organization of Securities Commissions (IOSCO) (2008) The role of credit rating agencies in structured finance markets, Final report. IOSCO Technical Committee. Madrid, Spain.

Issing Committee (2008) New Financial Order: Recommendations by the Issing Committee. Frankfurt: Center for Financial Studies. Available at: https://www.ifkcfs.de/fileadmin/downloads/publications/white_paper/White_Paper_No_1_Final.pdf [accessed 26 May 2012).

Kotecha, M., Weinberger, R., and Ryan, S. (2011) ‘The future of structured finance ratings after the financial crisis', The Journal of Structured Finance, Winter 2011, pp. 67-74.