Ratings agencies’ internal culture shifts, not technical error, enabled crisis mispricing

Evidence

42 I refer here to a paper by Donald MacKenzie (“The Credit Crisis as a Problem in the Sociology of Knowledge”), who argues that a shift in cultures of evaluation within the ratings agencies, from older corporate collateralized debt obligations to the newer CDOs composed of mortgage-backed securities, accounted for a number of “slips” when it came to evaluation of the dangers posed by the latter. Of course, MacKenzie realized that the narrative of “technological error” seems on its face implausible (pp. 1830–32); but by focusing so intently upon the narrowly confined world of the low-level analysts and traders, he misses most of the action surveyed in this volume. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 2345

Categorization

• XREF: Connects to Mirowski’s core theme that the Neoliberal Thought Collective’s causal narrative (‘technical error’) launders the true causes of the crisis — the same move traced across institutional analyses in this work. — connects to: Rating agencies increasingly function as rule makers rather than neutral judges. — Shapiro, Susan P., The Social Control of Impersonal Trust, 105

Broader Connections

• Rating agencies increasingly function as rule makers rather than neutral judges. #qualifies (0.75) — Shapiro, Susan P., The Social Control of Impersonal Trust, 105