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Reflection of "The Credit Rating Controversy" Finance Essay (Essay Sample)


Read the attached article and compose a short reflection on the article.
The attached article in the link " The Credit Rating Controversy Council on Foreign Relations(1).pdf" , please check it.
Please make sure you answer all the below components in your reflection.
(1) At the top of the page, list the name of the article, the author, and publication where it is sourced.
(2) The body of the reflection will have four parts. Each part is a separate paragraph. Note that a paragraph is more than a couple of sentences.
Part (a) - What are the main idea(s) that the author presents in this article?
Part (b) What is the author's position(s) on the ideas that are presented?
Part (c) - What did you learn from the article?
Part (d) - Do you agree or disagree with the author's position? Why?
NEED TO SUMBIT ON THE Turnitin, software to check for plagiarism against other written materials. Make sure you did your own work


Reflection of "The Credit Rating Controversy"
Student Name
Institutional Affiliation
Reflection of "The Credit Rating Controversy"
Article Name: The Credit Rating Controversy
Authors: James M. Lindsay and
Publication: Council on Foreign Relations
Rating agencies are expected to give comfort regarding the ability of an issuer to repay a debt. Ratings are critical because they assist in determining the level of interest that a borrower should pay. When Rating agencies issue inaccurate ratings, the move distorts the prices of debt instruments and the interest rates payable on them. Over the years, inaccurate ratings have led to asset bubbles that ultimately burst, hence interfering with the operation of the financial markets.
In this article, the Council of Foreign Relations (CFR) highlights the contribution of the “Big Three” global credit rating agencies i.e. Standard and Poor’s (S&P), Moody’s, and Fitch Ratings financial crises over the years. Firstly, the authors indicate that while the three rating agencies are expected to advise investors regarding the riskiness of different types of debt, they have resulted in exacerbating the financial crisis. The inability of the agencies to offer favorable evaluations regarding the solvency of financial institutions has led to the approval of extremely risky mortgage-related securities (Lindsay & Steil, 2015). Secondly, the authors indicate the shortcoming of the “issuer-pay” business model used by the rating agencies. 

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