NRSRO Rating Agencies (Moody's, S&P, Fitch)
The three reasons
- 1
Rating agencies caused trillions in losses by rubber-stamping structured finance and bond insurers
- 2
'Success fee' model corrupts NRSROs into underwriters, not independent judges
- 3
A 60-day issuance moratorium plus investor-pays research would restore ratings integrity
Primary demands
- Enact a 60-day 'New Issue Ratings Moratorium' barring NRSROs from contact with issuers/underwriters or from rating new fixed income securities pre-issuance
- Allow non-NRSROs to publish during the moratorium to foster an 'Investor Pays' research model
- Require SEC to revoke NRSRO status for consistent underperformance vs. peers
- Repeal NRSRO exemption from Reg FD to eliminate rating agencies' privileged access to material non-public information
- Mandate issuers disclose in prospectuses any information that could reasonably impact ratings
- Restructure NRSRO compensation into Base Fee, Ranking Fee (investor-voted), and Performance Fee paid over the life of the bond, with non-payment an 'Event of Default'
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Notable slides (6)
Notes
Atypical Pershing Square deck: this is a policy/regulatory reform proposal (a suggested rider to the Restoring American Financial Stability Act of 2010), not an activist investment thesis on a specific company. No ticker, no valuation, no price target. Structured as SCQA — Situation (ratings caused crisis), Complication (corrupting incentives, slow downgrades), Question (how to solve?), Answer (moratorium + investor-pays + revised fee structure). Uses two explicit 'Old Paradigm / New Paradigm' before-after split-panel slides (pages 9 and 11) which are the most reusable visual device in the deck. Named targets MBI, ABK, FNM, FRE, AIG are cited as examples of NRSRO rating failures rather than as activist targets. thesis_types set to 'other' because none of the enumerated investment thesis types fit a regulatory-reform argument.