'Information as a Condition of Justice in Financial Markets: The Regulation of Credit-Rating Agencies

In Lisa Maria Herzog (ed.), Just Financial Markets? Finance in a Just Society. Oxford: Oxford University Press. pp. 250-270 (2017)
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This chapter argues for deregulation of the credit-rating market. Credit-rating agencies are supposed to contribute to the informational needs of investors trading bonds. They provide ratings of debt issued by corporations and governments, as well as of structured debt instruments (e.g. mortgage-backed securities). As many academics, regulators, and commentators have pointed out, the ratings of structured instruments turned out to be highly inaccurate, and, as a result, they have argued for tighter regulation of the industry. This chapter shows, however, that the role of credit-rating agencies in achieving justice in finance is not as great as these commentators believe. It therefore argues instead for deregulation. Since the 1930s, lawgivers have unjustifiably elevated the rating agencies into official, legally binding sources of information concerning credit risk, thereby unjustifiably causing many institutional investors to outsource their epistemic responsibilities, that is, their responsibility to investigate credit risk themselves.



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Boudewijn de Bruin
University of Groningen

Citations of this work

philosophy of money and finance.Boudewijn De Bruin, Lisa Maria Herzog, Martin O'Neill & Joakim Sandberg - 2018 - In Edward Zalta (ed.), Stanford Encyclopedia of Philosophy. Palo Alto: Metaphysics Research Lab, Stanford University.

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References found in this work

Common ground.Robert Stalnaker - 2002 - Linguistics and Philosophy 25 (5-6):701-721.
Other–regarding epistemic virtues.Jason Kawall - 2002 - Ratio 15 (3):257–275.
Teaching Intellectual Virtues.Heather Battaly - 2006 - Teaching Philosophy 29 (3):191-222.

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