Discussion

Professor Sylla’s paper (Chapter 1, “A Historical Primer on the Business of Credit Rating”) is an excellent overview of the causes of the rise of the rating agencies. He ties it to the investment banks’ loss of credibility as certifiers of bond quality, and the proliferation in the number of issues. Of course, I am pleased that he has given some exposure to my own thesis about ratings as a cost-effective monitoring process. That, I can tell you, is the result many years of thinking about the problem of the role of the rating agencies and the economic basis for them.