Recent Criticisms of credit rating agencies

Rating agencies have received a lot of criticisms in recent years for the quality of their research. The value of such security ratings has been widely questioned after the 2007-09 financial crisis.

Lot of critics complain the agencies have lost their ability to independently judge the risk on certain investments — especially in light of AAA ratings given to mortgage-backed securities that collapsed when defaults on U.S. home loans shot up, triggering the financial crisis.

Critics also note that the agencies are paid by the very entities they rate, raising questions about their trustworthiness.

Many observers claim that they are poor financial forecasters, too slow to spot negative trends in the issuers that they track, and too late to revise their ratings.

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