A Temporary Setback for Credit Raters

Long-term prospects for the two major credit-rating agencies remain bright despite potential lawsuits and regulatory action.

Credit-rating agencies are losing the blame game. As Wall Street, regulators and investors try to get their stories straight about what has caused the current bout of economic unease and market turmoil, one thing they can agree on is that rating agencies are partly at fault.

The summertime blues were back on August 28, with the Dow Jones industrial average plunging 280 points, or 2.1%, and Standard & Poor's 500-stock index sinking 2.3%. Shares of Moody's (symbol MCO), the only pure-play credit rater, fell 2.9%, to $44.83, and are now down 37% so far this year.

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Contributing Editor, Kiplinger's Personal Finance