ABSTRACT
The chapter begins by assessing one of the key components that allow the agencies to transgress: the oligopolistic structure of their industry. The oligopolistic structure conveys a power that is rarely seen within other industry structures. Perhaps the most prevalent argument regarding the protection of the oligopoly is that the oligopoly is a 'natural oligopoly'. Frank Partnoy suggests that the rating agencies' informational value is so low that replacing their credit ratings as signifiers of market performance with market-based measures such as 'credit spreads' would be much more appropriate and efficient. The hypothesis intimates that the increased nervousness felt by investors after the collapse altered the market dynamics in that investors no longer trusted in 'household names', with the result being that they required some third-party verification to calm their nerves when investing. The proponents of this hypothesis are wide and varied, with Partnoy, Geisst and a whole host of others subscribing.
