A matter of trust

Faced with distrust in the market and suspicion from regulators, the three major credit rating agencies have proposed changing their methodologies for collateralised debt obligations. But will that be enough to placate supervisors and investors? By Alexander Campbell

Rating agencies have taken a thrashing since July, when the first of the residential mortgage-backed security (RMBS) and collateralised debt obligation (CDO) tranches with exposure to US subprime mortgage loans were downgraded. Since then, the agencies have come under heavy fire from investors over the accuracy of their ratings and for not reacting fast enough to evidence of a rise in subprime delinquencies as early as 2006. The saga has also reawakened concern about potential conflicts of