Understanding rating addiction: US courts and the origins of rating agencies' regulatory license (1900-1940)

Arbeitspapier

This paper discusses the regulatory license view that reliance by regulators on the output of rating agencies in the 1930s caused the agencies to become a central part of the fabric of the US financial system. Exploring pre-1930 court records, we find evidence of a growing reliance on the agencies that pre-dates the regulatory moves of the 1930s. We argue that courts began using ratings as financial community produced norms of prudence, providing a novel interpretation of the emergence of rating in financial systems as a product of trustee law. We remark that this created a legal license problem, creating incentives and conflicts of interest not unlike those which modern observers usually associate with regulation in the subprime crisis.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Graduate Institute of International and Development Studies Working Paper ; No. 11/2013

Classification and Topics

• Classification: Wirtschaft
• Subject: Ratingagentur ; Geschichte ; Finanzmarktregulierung ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Flandreau, Marc ; Sławatyniec, Joanna Kinga
• Event: Veröffentlichung
• (who): Graduate Institute of International and Development Studies
• (where): Geneva
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/77448
• Last update: 10.03.2025, 11:42 AM CET