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Three Credit Raters Have Ducked Reform

S&P, Moody's and Fitch weren't hit as hard by new rules after the financial crisis as banks were.

There’s a revealing scene in the film version of Michael Lewis’s The Big Short. It’s 2007; the subprime mortgage crisis has yet to unfold. Two hedge fund managers visit a Standard & Poor’s executive in her office on Water Street in Manhattan. One asks the exec to name a time in the past year when the company didn’t give a bank the AAA rating it was seeking. She demurs. “If we don’t work with them,” she says, “they will go to our competitors. It’s not our fault. It’s simply the way the world works.”

That was the way the world worked then—and, 10 years later, it’s not entirely clear how much has changed.

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