Resources for Basel II Capital Accord (Basel II)

Embedding ratings in regulation is mistake-critic

www.reuters.com

The core problem of the current credit ratings system is that ratings are so embedded in financial regulation that they serve as regulatory licences, not just information, a well known former banker and academic said.

"The regulatory dependence on ratings is a cow that the ratings agencies have been milking for many years, and the cow has gotten fatter and fatter and fatter," said Frank Partnoy, a law professor at the University of San Diego and author of "Infectious Greed".

"If there were some way that we could get rid of it, we could move to the next stage and not have all this disfunctionality where people have to have a rating for capital reasons," he told the Euromoney Global Borrowers & Investors Forum on Wednesday.

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