Ann Rutledge on ‘Wizards of Odds’

“The SEC’s ‘subprime mortgage’ problem is that the crisis has exposed a very serious information problem in the capital markets, and a perverse truth is revealed: financial firms make less money from information than from exploiting loopholes in our fragmented, deeply flawed capital market information systems. The SEC is the guardian of these fragmented, flawed systems, so it is very difficult for the SEC to take any action at all.” R&R’s Ann Rutledge makes this observation in her article “Wizards of Odds: The Rise and Fall of Rating Agencies,” posted on RGE Monitor. Ann warns that the SEC’s Proposed Rules for Nationally Recognized Statistical Rating Organizations fall short of addressing this fundamental issue, which in reality requires a massive overhaul of both the ratings system and GAAP. Read Ann’s article in full on the RGE Monitor Web site.