Big three credit ratings agencies still hold a huge amount of power

Kai Ryssdal Mar 11, 2016
HTML EMBED:
COPY

Big three credit ratings agencies still hold a huge amount of power

Kai Ryssdal Mar 11, 2016
HTML EMBED:
COPY

Right around this time, five years ago, what would eventually become the Dodd-Frank Wall Street Reform and Consumer Protection Act was making its way through Congress. A key provision in the bill was Title 9, subtitle C — Improvements to the Regulation of Credit Rating Agencies. Ratings agencies took a lot of the blame for the crisis, after they flat-out failed to rate risky bonds properly.

Dodd Frank was supposed to change things for the better, but five years later, things remain very much the same, with the big three agencies even stronger. Fitch, Moody’s and S&P, still account for more than 95 percent of all ratings.

The ratings agencies paid a fraction of the fines of the big banks, and their conflicts of of interest remain: namely that they get paid by the companies they rate. 

Marketplace’s Kai Ryssdal spoke with Tim Martin of the Wall Street Journal about what’s going on in the world of credit ratings, and whether there may be any meaningful alternatives in the future. 

Listen to the full interview in the player above. 

 

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.