Floyd Norris, chief financial correspondent for the New York Times, gives a disturbingly uninformative  account of RMBS and CDO markets in his article, When a Deal Goes Bad, Blame the Ratings, November 14, 2013. Not having done the research to really understand the causes of the credit...

By Greg Gordon | McClatchy Washington Bureau WASHINGTON — Moments before the Senate overwhelmingly passed a bill to overhaul the credit ratings industry seven years ago, Republican and Democratic sponsors took turns touting its promise for ending an entrenched oligopoly. The bill, they said, should break the viselike...

“Imagine the pharmaceutical industry having six FDAs, all competing to approve drugs,” said Rob Dobilas, who founded Realpoint LLC, the credit-rating company bought by Morningstar Inc. in 2010, referring to the U.S. Food and Drug Administration. “Everyone would be dead.” See Matt Robinson, Bloomberg News, Ratings Shopping Revived. Striking quote,...

On May 8, 2013, Sohu Business picked up an article in the HK press about a JV ratings agency between SEC-designated Egan-Jones, a Chinese agency, Dagong, and a Russian agency, RusRating, targeted for listing June 25 in HK. It is called, appropriately, "World Ratings." Perhaps not coincidentally,...

This is the title of a classic on change "management," Leading Change, by John Kotter. The word management is in quotes because the premise of the book is that change cannot be managed, it must be led. Going in a straight line to get off the beaten path and on to a new one seems preferable, but it won't lead you there. You need leadership to change course. The essential value-add of Kotter's book is that he linearizes the process of institutionalizing change so it looks like a dotted line. He identifies eight characteristic errors of change leadership that are like the holes between the dots. Reading Kotter's book, I was nagged by one question, the same one that had bothered me in a change-offsite sponsored a large NY based bank in the early 1990s. The session leader put up a power point slide similar to this one and asked, how would you advise Red Arrow to motivate the Blue Arrows to change direction? Right there, he lost me. 
  1. why does Red Arrow want to turn at a right angle to the crowd of Blue Arrows? Is he really smart or incredibly stupid? 

In Brain Dead, Arianna Huffington asks, "[W]hat accounts for the epidemic of illogical thinking in Washington, where policy makers refuse to grasp what's plainly right in front of them?" She is talking about the employment crisis, of course. Denial is the answer, obviously. But, denial of more than the fact of an employment crisis. This denial goes deep, casting doubts on the capabilities of our brightest economic experts. Expertise in today's market means proficiency in a way of thinking. We have ample reason to believe this way of thinking is part of the problem.

Talking about the SEC is like talking about "the Chinese government," "the United States," or any other large assemblage of people that are made up of different factions with different personalities, subcultures, policy preferences and goals. The SEC Division of Investment Management, in 1992, published a...

R&R has 8 out of the 10 required letters for NRSRO designation. The Office of Credit Ratings (OCR) at the SEC only considers one valid. A key area of disagreement is whether our valuations, calculated directly from our ratings, deserve to be considered "nationally recognized...