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Markets without borders

Jeremy Hobson Aug 30, 2007
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Markets without borders

Jeremy Hobson Aug 30, 2007
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Scott Jagow: I’m sure you’ve noticed whenever Wall Street has a good day, usually the markets in Asia and Europe also have gains, and vice-versa. These days, the markets have no borders, which is why this isn’t very surprising: Other countries now want to play a role in the oversight of U.S. financial institutions. Jeremy Hobson reports.

Jeremy Hobson: American credit rating agencies are the primary target of critics, who say misleading ratings exposed foreign investors to big losses. Josh Rosner directs the research firm Graham Fisher.

Josh Rosner: Many of the foreign regulators had assumed that our processes and controls were perhaps stronger than in fact they are, and are realizing that some of the transparency that they assumed to have existed didn’t.

So if the big credit rating agencies are the onboard navigation system of the American economy, foreign regulators want to have a hand on the steering wheel.

But professor Steve Thel at Fordham Law School says foreign investors shouldn’t be so quick to blame the rating agencies.

Steve Thel: It’s almost impossible to imagine a story in which rating agencies can guarantee the truth of the facts upon which they rely.

Thel says the agencies have to trust the data they’re given by the companies being rated, and he says investors should know that.

In Washington, I’m Jeremy Hobson for Marketplace.

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