Greed, Negligence, or System Failure ? Credit Rating Agencies and the Financial Crisis

TitleGreed, Negligence, or System Failure ? Credit Rating Agencies and the Financial Crisis
Publication TypeCase Study
Year of Publication2011
AuthorsSelig, K
Corporate AuthorsKenan Institute for Ethics, Duke University,
Pagination13 p.
PublisherKenan Institute for Ethics, Duke University
Publication Languageeng
KeywordsACCOUNTING , business , BUSINESS ethics , conflicts , Corporate , Credit , derivatives , ECONOMICS , Financial , market , Misconduct , Moody’s , professional , professional responsibility , regulatory , standard , subprime
AbstractCredit rating agencies rank the credit-worthiness of a wide variety of investment opportunities. Moody’s and others have been accused of massively understating the risk of the many complex financial products that may have sparked the financial meltdown of 2008. While the company’s failure (out of greed or negligence) to properly assess the risk of these instruments is well-known, more encompassing systemic factors affecting financial markets were crucial to the crisis. Conflicts of interest, shifts in corporate culture, heightened competitive pressures, and lack of regulatory oversight created a perfect storm that enveloped Moody’s and the entire economy. This case examines the structure of the credit rating industry and its place in the fi nancial system to shed light on the factors contributing to failures in the credit rating system, failures that helped bring about a global financial crisis. The case text and teaching notes for this case were completed under the direction of Dr. Rebecca dunning, the Kenan Institute for Ethic
NotesThis work is licensed under the Creative Commons Attribution - Noncommercial - No Derivative Works 3.0 Unported License. To view a copy of this license, visit You may reproduce this work for non-commercial use if you use the entire document and attribute the source: The Kenan Institute for Ethics at Duke University.
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