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Publications > A Brief History of Credit Rating Agencies: How Financial Regulation Entrenched this Industry's Role in the Subprime Mortgage Debacle of 2007 - 2008
A Brief History of Credit Rating Agencies: How Financial Regulation Entrenched this Industry's Role in the Subprime Mortgage Debacle of 2007 - 2008
A Brief History of Credit Rating Agencies: How Financial Regulation Entrenched this Industry's Role in the Subprime Mortgage Debacle of 2007 - 2008 Lawrence J. WhiteOctober 16, 2009 Financial Markets, Financial and Monetary, Regulatory Studies Program, Mercatus On Policy, Mercatus, Financial Markets Working Group Mercatus On Policy
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 In the run-up to the financial crisis of 2007-2008, market participants relied heavily on the ratings that credit rating agencies assigned to financial instruments, including mortgage-backed securities, to determine creditworthy investment options. As mortgage holders began to default on their loans and many highly rated securities lost value, the poor quality of these ratings became apparent. An in-depth study shows that regulatory decisions over several decades, facilitated a noncompetitive credit rating industry, which in turn contributed to the financial crisis of 2007-2008.
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