Credit-rating agencies loom large in Europe crisis
The rating agencies that sort good investments from junk are once again injecting fear into financial markets. Only this time it’s for warning investors about a possible threat — Europe’s debt crisis — rather than for failing to see one coming.
Why do their words carry so much weight?
These are the same firms that gave safe ratings to high-risk U.S. mortgage investments that later imploded and caused the financial crisis. Those failures raised doubts about how much the assessments of rating agencies like Standard & Poor’s, Moody’s Corp. and Fitch Ratings are really worth.