International development policies
The regulation of credit rating companies should also consider political and legal obstacles in companies that operate in several countries, there may be disharmony in the legal requisites of several countries, it is therefore important that uniform regulations be adopted. Furthermore, the regulations should offer superior suppleness for central banks to grant liquidity and provide extensive coverage and attention on credit and asset booms.
As from the credit crisis, the regulation should offer advanced crisis responses, where national governments are empowered to take drastic actions, both within the country and internationally in cases of crisis, not just wait for dictates of market forces. As regards the containment and restructuring process, the regulations should provide for economic support for restructuring firms, the regulations should also offer effectual supervision, of the activities, entities, and risks of credit rating firms.
In addition, there is need for strengthening further the oversight of counterparty risk management in regulated institutions, to avoid immense effects caused by unregulated companies. Regulations should in addition offer minimum quantitative funding liquidity buffer. These are premium assets that can be liquefied within short times; this is envisioned to provide assurance and indemnity at times when the financial institutions are faced with liquidity challenges.
From the credit crisis, it was apparent that financial institutions had underestimated the need to have high quality liquid collateral. Conclusion A success of every field requires the involvement of all stakeholders, for the regulation of Credit rating firms also to succeed; it requires the involvement of all the concerned stakeholders. The laws concerning regulation should be altered to give investors a voice in the rating process, for example investors, should be allowed to seek customized professional advice from credit rating firms, at their expenditure.
Or having Investor sponsored credit rating companies. Moreover, the trading companies should revel more about the product being sold to allow investors make objective judgments. Laws should be enacted to ensure that crisis effects are mitigated earlier, and that governments have the powers to offer independent audit of credit rating companies, and take in cases of crisis, the government is obliged by the regulations to take early corrective measures.
Blumberg,Phillip. Blumberg on corporate groups. Aspen Publishers, 2005, Online. Carmichael, Jeffrey, and Pomerleano, Michael. The development and regulation of non-bank financial institutions. Washington: World Bank Publications, 2002. Print. Dell , Sidney . International development policies: perspectives for industrial countries. Durham: Duke University Press, 2001. Print.