Editor: David Reiss
Brooklyn Law School

September 18, 2015

Why Credit Rating Agencies Exist

By David Reiss

Robert Rhee has posted Why Credit Rating Agencies Exist to SSRN. The abstract reads, Although credit rating agencies exist and are important to the capital markets, there remains a question of why they should exist. Two standard theories are that rating agencies … Continue reading

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September 18, 2015 in Rating agencies | Permalink | No Comments

February 19, 2015

Treasury Gives RMBS a Workout

By David Reiss

The Treasury has undertaken a Credit Rating Agency Exercise. According to Michael Stegman, Treasury recognized that the PLS market has been dormant since the financial crisis partly because of a “chicken-and-egg” phenomenon between rating agencies and originator-aggregators. Rating agencies will not … Continue reading

January 22, 2015

Kroll on Mortgage Performance

By David Reiss

The Kroll Bond Rating Agency has issued an update of its residential mortgage-backed securities model methodology, Residential Mortgage Default and Loss Model. Before the financial crisis, ratings models seemed to be very reliable, data-driven models of probity and caution. We … Continue reading

December 26, 2014

SEC Update on Rating Agency Industry

By David Reiss

The staff of the U.S. Securities and Exchange Commission has issued its Annual Report on Nationally Recognized Statistical Rating Organizations. The report documents some significant problems with the rating agency industry as it is currently structured. The report highlights competition, … Continue reading

November 21, 2014

Does Morningstar Speak with Forked Tongue?

By David Reiss

Morningstar Credit Ratings, a small Nationally Recognized Statistical Rating Organization (albeit a subsidiary of Morningstar, the large investment research firm), has issued a Structured Credit Ratings Commentary on Rating Shopping in Asset Securitization Markets. It finds that Rating shopping is … Continue reading

June 13, 2014

S&P: Future of Private-Label RMBS Uncertain

By David Reiss

S&P has posted an Executive Comment, Lifted By Improving Economic Conditions, The U.S. Leads The Global Securitization Rebound–But Headwinds Remain. It concludes, After surviving its first severe test, the market for securitization is slowly emerging from a sharp downturn, demonstrating … Continue reading

June 5, 2014

The (R)evolution of Single-Family Rental Securitization

By David Reiss

Kroll Bond Rating Agency distributed its Single-Family Rental Securitization Methodology. Because this is a new asset class, it is interesting to watch how rating agency’s assess the risks inherent in it. And it will be interesting, of course, to evaluate … Continue reading