Word: idea
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Imagining India: The Idea of a Renewed Nation By Nandan Nilekani Penguin Press; 528 pages...
...fresh idea comes from Eric Dinallo, the New York state insurance superintendent, who in a March 3 Wall Street Journal op-ed suggested that insurance commissioners mediate the ratings process, since insurers are among the largest buyers of rated bonds. Regulators would collect a fee from insurance outfits and then use the money to buy ratings for everyone to use. If the ratings proved too rosy over time - or inaccurate in another way - regulators would switch to a different ratings company...
...That idea is similar to one put forth in a recently published book of economic-policy proposals written by professors at New York University's Stern School of Business. Under their system, a company that wanted to have its debt rated would pay a fee to a government-run centralized clearing platform, which would then pick a ratings firm. Firms, again, would be evaluated on the accuracy of their ratings over time. "It breaks the conflict of interest," says Matthew Richardson, a professor of applied financial economics at Stern...
...reliance on the credit ratings issued by these entities." One example: money market mutual funds, which are currently only allowed to hold high-grade paper. High-grade - as defined by the ratings agencies. In comments responding to the proposed rule change, sellers of money market funds balked at the idea of not being able to use the ratings agencies' opinions as a way to get the regulatory greenlight. That proposed rule hasn't gone anywhere...
...feel. But the TALF plan helps in its own way. Though just getting started, it seems to have a chance at success, and thus gives the impression that the collaboration between the government and investors might work. Next to those two pillars, the once shaky "public-private investment fund" idea now seems sturdier and more likely to succeed...