Sunday 11 October 2009

Highly rated? No, but agencies are here to stay

Things have come around full circle. Not too long ago, much of the blame for the financial market meltdown was placed squarely at the feet of lax rating agency evaluation.

Having learned their lessons, and to avoid future criticism and possible legal action by investors, today’s rating agencies are leaning too much towards the cautious side. If in doubt, go for a lower rating seems to be their motto.

This is not to denigrate their work, for in the final analysis we need independent financial analysts to guide the layman through financial reports and doublespeak – to see the accounting wood from the trees.

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