In a recent op-ed, American Action Forum President Douglas Holtz-Eakin discussed the challenge of deciding who should pay for credit ratings, comparing “investor-pays” models to “issuer-pays” models. The op-ed was in response to remarks from SEC Chair Jay Clayton on rating agency compensation. Noting that, “Nothing is perfect,” Holtz-Eakin states “At the broadest level, the status quo supports the greatest market efficiency and ability to attract capital to niche investments, and it still has a market-based mechanism to ensure quality and control potential conflicts of interest. There is a reason the investor-pays model disappeared and issuer-pays should not.”
Read more via American Action Forum.