Ratings agencies are not the root problem but a symptom: the conflict-of-interest 'issuers pay' story is wrong because everyone always knew about that conflict; ratings agencies actually work for the buy side, whose investors wanted inflated ratings because ratings determine their regulatory treatment (how much they can leverage and what classes they may hold), so 'ratings shopping' could only have produced a race to the bottom because the buy side wanted it to.

causalpending

Speaker

Charles Calomiris

Evidence Quote

the ratings agencies are really working for the buy-side whether the buy-side is paying them or not... the buy side are the ones for whom the ratings are used for regulatory purposes

Source

Charles Calomiris on the Financial Crisis 10/26/2009EconTalk
Created: 6/15/2026, 9:20:15 AM

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