| Barron's Letter to the Editor
By Vickie Tillman
14 January 2008
Barron's
To the Editor:
In his Dec. 24 cover story ("Failing Grade"), Jonathan R. Laing questions the integrity, transparency and competence of the rating agencies. While the current situation in the credit markets has taught us all some tough lessons, Laing's inaccurate portrayal of our business illustrates that a fundamental misunderstanding still exists, among some, about the role ratings play in capital markets and the value our business model brings to market participants.
Investors value rating agencies' issuer-pays business model because our ratings are available to the public in real time, free of charge.
We support the independence of our rating process by separating our analytical and commercial activities, having all ratings assigned by committees, and structuring analysts' compensation so it isn't dependent upon fees related to the ratings they assign. We are developing ways to further strengthen the way we manage potential conflicts of interest.
Contrary to Laing's implication, we do disclose historical default rates of the financial products we rate. We regularly publish default studies at www.standardandpoors.com .
We have an excellent long-term record of assessing creditworthiness, which speaks to the knowledge, experience and expertise of our people.
Going forward, we will continue to take action to further strengthen our ratings process and to be part of the solution to the current situation in the global credit markets.
Vickie Tillman
Executive Vice President
Credit Market Services
Standard & Poor's
New York
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