Evan Drutman was quoted in a Dow Jones Financial News Online article discussing an Obama administration proposal to regulate credit rating agencies, which purports to bar consulting work by rating firms for their rated companies and eliminate the practice of “rating shopping” by corporations, whereas the company solicits preliminary ratings from several agencies, but only pays for and discloses the most favorable.
The proposal also would force rating firms to provide more data about risks associated with a particular rated security. Drutman, however, asked, “When the investor has all that information, are they going to rely less on the letter rating? My guess is they will still rely on the letter rating.”