Accounting for the Failures of Risk Assessment

The practices of the world's three dominant rating agencies -- Standard & Poor's, Moody's and Fitch -- have remained little changed since 2008, despite the fact that they are, in the words of the Nobel prize-winning economist Joseph Stiglitz, one of the "key culprits" behind the formation of the subprime mortgage bubble, whose collapse shook the world's financial foundations. Much has been said and written about the conflicts of interests that allegedly led agencies to overrate subprime mortgage-backed securities -- conflicts stemming from the fact that the companies being evaluated actually pay for the rating. See full Article.