As Financial Management goes to press, every day seems to bring news of fresh disasters in the financial services sector. Lehman Brothers has gone bust, Merrill Lynch has been taken over and HBOS has been rescued by a Lloyds TSB takeover. A credit rating agency is supposed to gauge the creditworthiness of organizations issuing debt instruments such as corporate and government bonds, so that investors, banks, regulators and other market operators can use them to measure relative credit risk. If a company is "downgraded" -- as AIG was in September -- investors either try to dump shares or force the company to dump its executives and change tack. The proposed changes are part of a broad package of measures aimed at the credit rating industry and come as global regulators re-examine the degree to which their own regulatory frameworks have come to depend on credit ratings.
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