Kroll: taking aim at the ratings agency oligopoly

Credit rating agencies suffered a barrage of criticism in the wake of the financial crisis for being asleep at the switch. James Kroll, widely known as the godfather of the investigations, intelligence and security industry, decided it was time for a change in the way ratings agencies operate.

So he opened Kroll Bond Ratings.

“When I looked at the financial crisis, it looked to me like this was an area that was ready for change and meaningful reform,” he says. “I think the oligopoly has had a rigged game now for several years.”

Kroll believes the credibility of ratings agencies is in serious need of reform.

“You should judge any rating agency by the accuracy of their ratings over time and with these people who are wrong 40 percent of the time, why in the world would you give them business unless you have no choice…and that’s what we hope to change,” he says. “If you were any other business they [the ratings agencies] would be out of business right now.”