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.
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.
ReplyDelete