Rating agencies come under fire after subprime fiasco
Rising delinquencies in the US subprime mortgage sector triggered a flood of downgrades by credit-rating agencies.
As a result, confidence in ratings was shaken and the agencies have come under fire from investors and regulators.
Hundreds of residential mortgage-backed securities (RMBSs) and collateralised debt obligations (CDOs) of asset-backed securities (ABSs) – including some AAA-rated tranches – have been downgraded. The actions severely shook confidence in the reliability of credit ratings and have caused regulators to take a close look at the their role.
However, the credit-rating agencies are not
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