Rock-star analyst and Paris Hilton impersonator Meredith Whitney is gearing up to launch a credit ratings service that will compete with Standard & Poor’s and Moody’s, the Financial Times reports. Apparently she’s found an opening in the market, after years of bad ink for the major ratings agencies over conflicts of interest and lazy, incompetent analysis.
Whitney told the FT that her firm, Meredith Whitney Advisory Group, already does a lot of the work the major agencies do. “We’re providing ratings services now. … But for the fact that they’re on a subscription basis. … We’re not being paid by the issuers.” The next step, said Whitney, is to become a “formal competitor to S&P and Moody’s. Our system is far more transparent, the credibility is far greater.”
And what about the conflicts of interest that prompted mountains of criticism if S&P and Moody’s, who are paid by bond issuers for ratings? “I firmly believe in an issuer pay model. The subscribers are never going to pay and never going to pay enough. … If you run a good business and you have the compliance in place and everything in place, there shouldn’t be any problems.”
Whitney earned a reputation as a hard-nosed analyst by issuing a bearish call on Citigroup in Oct. 2007, when optimism about the financial sector was still running fairly high. “Conflicts of interest only slow you down, and I don’t want to be slowed down,” she told the FT. “There’s too much to do.”
mtaylor [at] observer.com | @mbrookstaylor