Friday, November 19, 2010

Meredith Whitney to Start Her Own Credit-Rating Agency

The fee structure will be modeled after that of Moody's and S&P. Bond issuers will pay for the ratings. After that there will likely be zero resemblance o Moody's and  S&P.

Whitney will likely try something new: Truth in bond ratings.

Whitney is a pretty tough gal on her own, but any bond issuer thinking of intimidating her should keep in mind she is married to John Layfield, aka JBL, a pro wrestler, who holds the World Wrestling Entertainment record as the longest reigning WWE Champion in SmackDown history.

1 comment:

  1. Even if this starts out with good intentions, if the fee structure is still based on the issuer-pays model, then the economic incentives which produced the wildly exaggerated credit ratings for securities during the housing boom will still apply. From a praxeological perspective it will very closely resemble Moody's and S&P. This thinking that "If we just put the right people in charge, then the system will work" is silly. The system is the problem; it produces the incentives, good or bad, and people respond to them accordingly.