Comments on: Partnoy on the Market Crisis, Credit Rating Agencies, and The Match King http://www.concurringopinions.com/archives/2009/05/partnoy_on_the.html The Law, the Universe, and Everything Tue, 14 Feb 2012 05:18:12 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Concurring Opinions Partnoy on the Market Crisis Credit Rating | fix my credit http://www.concurringopinions.com/archives/2009/05/partnoy_on_the.html/comment-page-1#comment-64144 Concurring Opinions Partnoy on the Market Crisis Credit Rating | fix my credit Wed, 17 Jun 2009 02:10:06 +0000 http://www.solove.org/archives/2009/05/partnoy-on-the-market-crisis-credit-rating-agencies-and-the-match-king.html#comment-64144 [...] Concurring Opinions Partnoy on the Market Crisis Credit Rating Posted by root 59 minutes ago (http://www.concurringopinions.com) Partnoy on the market crisis credit rating agencies and the match king posted by kaimipono d wenger concurring opinions powered by wordpress Discuss  |  Bury |  News | Concurring Opinions Partnoy on the Market Crisis Credit Rating [...] [...] Concurring Opinions Partnoy on the Market Crisis Credit Rating Posted by root 59 minutes ago (http://www.concurringopinions.com) Partnoy on the market crisis credit rating agencies and the match king posted by kaimipono d wenger concurring opinions powered by wordpress Discuss  |  Bury |  News | Concurring Opinions Partnoy on the Market Crisis Credit Rating [...]

]]> By: Tim H http://www.concurringopinions.com/archives/2009/05/partnoy_on_the.html/comment-page-1#comment-63992 Tim H Mon, 01 Jun 2009 19:55:41 +0000 http://www.solove.org/archives/2009/05/partnoy-on-the-market-crisis-credit-rating-agencies-and-the-match-king.html#comment-63992 I might have to give the book a read. looks like good stuff I might have to give the book a read. looks like good stuff

]]> By: Notes From All Over - for week ended May 9 | Times & Seasons, An Onymous Mormon Blog http://www.concurringopinions.com/archives/2009/05/partnoy_on_the.html/comment-page-1#comment-63253 Notes From All Over - for week ended May 9 | Times & Seasons, An Onymous Mormon Blog Sat, 09 May 2009 13:59:43 +0000 http://www.solove.org/archives/2009/05/partnoy-on-the-market-crisis-credit-rating-agencies-and-the-match-king.html#comment-63253 [...] One cause of the financial crisis that you probably haven’t heard about. [...] [...] One cause of the financial crisis that you probably haven’t heard about. [...]

]]> By: Russ Frandsen http://www.concurringopinions.com/archives/2009/05/partnoy_on_the.html/comment-page-1#comment-63090 Russ Frandsen Tue, 05 May 2009 09:37:03 +0000 http://www.solove.org/archives/2009/05/partnoy-on-the-market-crisis-credit-rating-agencies-and-the-match-king.html#comment-63090 Kaimi, As predictable, the government regulations mandating the role of the credit rating agencies removed the agencies from the discipline of the markets,and a huge crisis developed. Yet, the true market was signaling far in advance the great problems. Follow the trading prices of the underlying securities and the market clearly foresaw the risk and priced them appropriately. Without the distortions of the government mandates, the market would have provided the appropriate information to avoid the systemic risk that actually ocurred. Kaimi, As predictable, the government regulations mandating the role of the credit rating agencies removed the agencies from the discipline of the markets,and a huge crisis developed. Yet, the true market was signaling far in advance the great problems. Follow the trading prices of the underlying securities and the market clearly foresaw the risk and priced them appropriately. Without the distortions of the government mandates, the market would have provided the appropriate information to avoid the systemic risk that actually ocurred.

]]> By: Russ Frandsen http://www.concurringopinions.com/archives/2009/05/partnoy_on_the.html/comment-page-1#comment-63089 Russ Frandsen Tue, 05 May 2009 09:36:53 +0000 http://www.solove.org/archives/2009/05/partnoy-on-the-market-crisis-credit-rating-agencies-and-the-match-king.html#comment-63089 Kaimi, As predictable, the government regulations mandating the role of the credit rating agencies removed the agencies from the discipline of the markets,and a huge crisis developed. Yet, the true market was signaling far in advance the great problems. Follow the trading prices of the underlying securities and the market clearly foresaw the risk and priced them appropriately. Without the distortions of the government mandates, the market would have provided the appropriate information to avoid the systemic risk that actually ocurred. Kaimi, As predictable, the government regulations mandating the role of the credit rating agencies removed the agencies from the discipline of the markets,and a huge crisis developed. Yet, the true market was signaling far in advance the great problems. Follow the trading prices of the underlying securities and the market clearly foresaw the risk and priced them appropriately. Without the distortions of the government mandates, the market would have provided the appropriate information to avoid the systemic risk that actually ocurred.

]]> By: Frank http://www.concurringopinions.com/archives/2009/05/partnoy_on_the.html/comment-page-1#comment-63086 Frank Sun, 03 May 2009 23:15:50 +0000 http://www.solove.org/archives/2009/05/partnoy-on-the-market-crisis-credit-rating-agencies-and-the-match-king.html#comment-63086 I'm an admirer of Partnoy's work---thanks for the post. But I also think that we need to ask more fundamental questions about the role of ratings agencies and the biases they generate. Consider this argument from John Quiggin: "State and municipal governments are beginning to rebel against the system of discrimination under which municipal bonds get rated around six grades lower than corporate bonds of comparable quality. That’s the estimate of the agencies themselves - the reality is far worse. As the NYTimes notes, “since 1970, A-rated municipal bonds have defaulted far less frequently than corporate bonds with top triple-A ratings.” *** "What could replace reliance on ratings agencies? For those who want a reasonably secure guarantee against default, the best advice at present would be to restrict investments to those with an explicit guarantee from a developed-country national or state government. An obvious implication is that states would need to guarantee, or borrow on behalf of, municipalities and agencies. This is already done on a substantial scale for example by Queensland Treasury Corporation." http://johnquiggin.com/index.php/archives/2008/03/08/after-the-ratings-agencies/ What is so sad about our current system is that, far from being a Hayekian dream, we have central planning by a small group of bankers enabled by hacks like the CRAs. And the more we "deregulate," the more powerful that group is likely to become. I’m an admirer of Partnoy’s work—thanks for the post. But I also think that we need to ask more fundamental questions about the role of ratings agencies and the biases they generate. Consider this argument from John Quiggin:

“State and municipal governments are beginning to rebel against the system of discrimination under which municipal bonds get rated around six grades lower than corporate bonds of comparable quality. That’s the estimate of the agencies themselves – the reality is far worse. As the NYTimes notes, “since 1970, A-rated municipal bonds have defaulted far less frequently than corporate bonds with top triple-A ratings.”

***

“What could replace reliance on ratings agencies? For those who want a reasonably secure guarantee against default, the best advice at present would be to restrict investments to those with an explicit guarantee from a developed-country national or state government. An obvious implication is that states would need to guarantee, or borrow on behalf of, municipalities and agencies. This is already done on a substantial scale for example by Queensland Treasury Corporation.”

http://johnquiggin.com/index.php/archives/2008/03/08/after-the-ratings-agencies/

What is so sad about our current system is that, far from being a Hayekian dream, we have central planning by a small group of bankers enabled by hacks like the CRAs. And the more we “deregulate,” the more powerful that group is likely to become.

]]> By: Ferris http://www.concurringopinions.com/archives/2009/05/partnoy_on_the.html/comment-page-1#comment-42959 Ferris Sat, 02 May 2009 18:26:29 +0000 http://www.solove.org/archives/2009/05/partnoy-on-the-market-crisis-credit-rating-agencies-and-the-match-king.html#comment-42959 Prof. Partnoy's suggestion that liability under the securities laws be extended to rating agencies is interesting, but one wonders how disinterested it is given his extensive work as an expert witness for securities plaintiffs' lawyers. Prof. Partnoy’s suggestion that liability under the securities laws be extended to rating agencies is interesting, but one wonders how disinterested it is given his extensive work as an expert witness for securities plaintiffs’ lawyers.

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