Credit rating firms now function as regulators whose ratings corporations actively negotiate around.
Evidence
Because of the growing complexity of financial markets and the securities they offer, rating firms are increasingly taking on the role of regulators and rule makers as well as judges. Ratings become negotiable as corporations structure their deals to accommodate the demands of the raters and thereby get the ratings they need (Monroe 1986). — Shapiro, Susan P., The Social Control of Impersonal Trust, 105
Categorization
- XREF: Connects to the 2008 financial crisis literature and to my knowledge of rating-agency conflicts of interest; this 1987 observation anticipated that failure. — connects to: Rating agencies increasingly function as rule makers rather than neutral judges. — Shapiro, Susan P., The Social Control of Impersonal Trust, 105; Credit ratings can be rented, shifting risk onto investors who trust them. — Shapiro, Susan P., The Social Control of Impersonal Trust, 126
- SHARE: Worth sending to anyone who follows financial regulation history — a 1987 source already describing rating agencies as regulators.
Related
- Rating agencies increasingly function as rule makers rather than neutral judges. (similarity 0.90)
- Credit ratings can be rented, shifting risk onto investors who trust them. (similarity 0.80)
Broader Connections
- Rating agencies increasingly function as rule makers rather than neutral judges.
#corroborates(0.85) — Shapiro, Susan P., The Social Control of Impersonal Trust, 105 - Credit ratings can be rented, shifting risk onto investors who trust them.
#expands(0.80) — Shapiro, Susan P., The Social Control of Impersonal Trust, 126