CFOZone.com - The Network of Corporate Finance

Very possibly, by the likes of a [urlhttp://www.cfozone.com/index.php/Newsflash/Moody-s-prospects-unscathed-by-reform-say-analysts.html]blog post by Marine Cole [/url]last week, citing a BofA/Merrill Lynch anaylst who see Moody's as a "toll collector on the credit highway."

Yet in a world governed by truth, beauty and the American way, if a toll collector has a history of giving bad directions to travelers on the credit highway -- and is a disreputed toll-house squatter by any other name -- wouldn't (and shouldn't) that toll collector's government-issued franchise be in jeapordy?

It continues to amaze me that legislation regarding credit agency reform doesn't address the crux of the matter--how agencies get paid and the conflict of interest there. I've heard and read rationalizations for this that didn't make sense. It just seems to be such a glaring, obvious conflict of interest. If you want to reform the system, that's where you should start.

Did you see Deven Sharma, president of Standard & Poor's article on WSJ.com yesterday explaining why ratings requirements don't make sense? Check it out.
http://online.wsj.com/article/SB20001424052748703959804575006694196038802.html

Just wanted to update this discussion. It's such an important topic. And nothing substantive has been done to address how credit agencies work and the conflict built into the model. I find it hard to take anything they say at this point, but we still seem to be relying on them.