Why Credit Ratings Are Drawing Criticism

Experts: Rating Agencies Need to Be Smarter in Evaluating Investments
– GlobeSt.com
GlobeSt.com interviewed Manatt’s Tom Muller, co-chair of the firm’s real estate and land us practice, for an article on the criticism that credit ratings have drawn lately with regard to their role in the financial system.
 
Muller told the publication that ratings agencies came into being in order to provide a service intended to let investors shortcut the difficult and time-consuming process of evaluating investments for themselves.
 
“While their ratings are helpful, investors have learned the hard way that they placed too much reliance on those ratings,” he said. “Real estate securitization is coming back only very slowly partly because the rating agencies have lost their credibility, so investors feel they have to underwrite the loans in the pool themselves.”