'Issuer-Pays' Rating Model Draws Fire
Jerome Fons, who served as managing director of Moody's credit policy before leaving the firm in August 2007, testified that "a large part of the blame... can be placed on the inherent conflicts of interest found in the issuer-pays business model and rating shopping by issuers."
The practice of rating shopping has been particularly prevalent in the structured finance market as issuers of structured debt would invite the "rating agencies to preview the collateral pools" and "provide preliminary
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