2016 | OriginalPaper | Chapter
Cheating Issues at S&P and Moody’s
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In the early 2000s, there were three major rating firms in the United States: S&P, Moody’s, and Fitch. Rating agencies have reputational capital to protect: the opinions they express only have value if people believe those opinions are accurate indicators of creditworthiness. Therefore, in the lead-up to the global financial crisis, how in the world could two of these firms, S&P and Moody’s, have assigned triple-A ratings to many mortgage-related securities that plummeted in value when the housing bubble burst?1