Best Business Commentary

Congress is leaning toward greater regulation for officially sanctioned credit rating agencies, says Richard Beales in BreakingViews.com. Hedge-fund managers should be very afraid, says Daniel Gross in Slate.

Cut ratings agencies loose

Congress is leaning toward greater regulation for officially sanctioned credit rating agencies, says Richard Beales in BreakingViews.com. But it would be better to “end the practice of giving ratings official blessing in the first place.” Investors and government officials don’t use them correctly, anyway, and “tighter regulation” would stifle both government agencies and financial innovation. Sure, “investors would—shockingly—have to rely more on their own analytical work,” but they might demand more “simplicity and standardization” in assessing risk. “That doesn’t sound like such a bad result.”

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