Hi, George.
Thanks for reply> >
Ah. So *I* could start a blog that assigned ratings to securities. It might be completely ignored, and, even if it was read and my ratings accepted as having some semblance of accuracy by assorted parties, my ratings wouldn't automatically qualify as "U.S. Gummint-Recognized Rating"... but I could do it.
( The financial industry will, no doubt, rest easier on learning that I have no intention of doing this. )
Okay. "Nationally Recognized Statistical Rating Organization". ( Wonder what the "Non-Statistical Rating Organizations" use... "but that, O Best Beloved, is another story." )
Something like "The McKenney Financial Assessment Blog ratings do not appear to be so far out of line as to force us to take you to court if you use them to puff up your product"?
Let's see...
(2) Do I look like I can be easily bribed or intimidated? (3) Can my analysts add and subtract without excessive supervision? (4) Am I already bought? (5) Do my rating methods involve dowsing, witchcraft, or human sacrifice? (6) Can my staff and I be trusted to keep our mouths shut?
Seems reasonable. ( "The SEC is visiting today; get that pentacle cleaned up!" )
Were... ? Sorry -- I think I lost a predicate here or something. "Were given an AAA rating", perhaps?
Wait a minute. If the NRSROs don't have to reveal their methods, how can the SEC say that its "No Action Letter" has evaluated these unrevealed methods? ( Is the *SEC* using witchcraft? )
But, since it's a "non-NRSRO" -- assuming I've got this right -- then companies can't publicly use that company's ratings to sell their products. I'd guess that they could supply two figures -- Moody's rating
*and* CompanyX's rating -- but that would likely mean paying two fees. What was that old line about computer hardware? "Nobody ever lost their job by buying IBM"? *If* you buy the argument that (e.g.) Moody's Secret Method For Financial Divination Using Tea Leaves And Charred Report Fragments actually works, and that divulging it would destroy the company, I can see only one route to having the ratings agencies... er, rated: by requiring that the method be disclosed to some group like the SEC so that group can maintain the secrecy of (e.g.) Moody's methods yet remain independent of Moody's so the designated group can be relied upon to perform the necessary analyses in a disinterested fashion.Is there another approach to this, one that wouldn't involve hours of televised Committee meetings where ratings agencies moan and sob that revealing the truth to the SEC would destroy the entire financial industry?
Frank