Rating Agency Worker: ‘I Am Genuinely Frightened’
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.