20 Mar Bailout Requires Reform for Rating Agencies: Ann Rutledge in WSJ

The March 20 edition of The Wall Street Journal quotes R&R’s Ann Rutledge calling for rating agencies to develop new ways to rate debt as they benefit from the government’s bailout program:

“[Rating agencies] are still paid for their ratings by the companies whose bonds they rate, a potential conflict of interest. And much-anticipated competition for the three companies has failed to materialize so far. ‘Until the rating firms bite the bullet and develop forward-looking signals and methods, it’s going to be same old, same old, and their models can be gamed,’ says Ann Rutledge, principal of New York structured-finance advisory firm R&R Consulting and a former credit-rating analyst.”

Read the full article, “Raters See Windfall in Bailout Program” by Serena Ng and Liz Rappaport, The Wall Street Journal, March 20, 2009 (subscription required for access).