Rating Agency Worker: ‘I Am Genuinely Frightened’

Tuesday, July 24, 2012
By Paul Martin

Joris Luyendijk
Jul. 24, 2012

We are meeting in the heart of the City after the banking blog called on rating agency employees to talk about their experiences. The man I am meeting is British, in his early 40s, a fast talker and very friendly, the sort of person to apologise profusely when arriving four minutes late. He orders an orange juice.

“Every time I read about a new financial product, I think: ‘Uh-oh.’ Every new product is described in those same warm, fuzzy phrases: how great they are and how safe. Well, that’s how credit default swaps and asset-backed securities were explained when banks were introducing these.

“I still get so angry when I think about it. Taking a job at a rating agency seemed a perfect match: drawing a good salary while providing a service of genuine value for society. We need ratings to work out how safe a company or an investment bond is, what the risk of default might be. If you can’t trust it, you shouldn’t do business with it – it’s that simple.

“The reality was very different. What’s making me even angrier is that we don’t seem to have learned from the crisis. It’s back to business as usual. I am no longer with a rating agency, and when I ask former colleagues what lessons they’ve taken away from the 2008 debacle, they give me a blank stare and say: ‘That wasn’t us, that was Moody’s and Standard & Poor’s.’ But we just lucked out: our methods were similar.

The Rest…HERE

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