Speakers at the Johnson School
Financial Crisis 2008-09
Where Were the Ratings Agencies?
Frank Raiter
Director, Luminent Mortgage Capital, Inc.
Former managing director and head of Mortgage Backed Securities Rating Group, Standard & Poor's
"Where Were the Ratings Agencies?"
March 11, 2009
Frank Raiter, former managing director at Standard & Poor's and head of its Mortgage Backed Securities Rating operations, was a guest speaker on March 11 for "Ethics & Corporate Culture," a new course taught by Dana Radcliffe, Day Family Senior Lecturer of Business Ethics, and jointly offered by the Johnson School and the Law School.* Last fall, Raiter testified before Congress on the role of the credit rating agencies in the current financial crisis. He was also featured in "Credit and Credibility," an episode of "NOW" on PBS, which aired in late December.
In these selected video clips, excerpted from his presentation, Raiter calls the ratings business, as monopolized by Standard & Poor's, Moody's, and Fitch, an "oligopoly sanctioned by the federal government." He also outlines an alternative incentive/compensation system that would address the conflict of interest inherent in the current system, and comments on some of the proposals for reform. View the full selection of eClips video clips from Frank Raiter's presentation, and from a one-on-one interview with him.
Raiter is now a director at Luminent Mortgage Capital, Inc., a mortgage REIT. From September 2006 to August 2007 he was an instructor in corporate finance, principles of investment, and capital markets and financial institutions management at the James Madison University College of Business. He was a managing director and head of the Mortgage Backed Securities Ratings Group at Standard & Poor's, where he was responsible for criteria and analytical modeling prior to his retirement from that institution in 2005. During his tenure at S&P, he directed the development and distribution of the LEVELS, DACSS and SPIRE models. Raiter served as chief investment officer and treasurer of Caliber Bank in Phoenix, Ariz. from April 1994 to September 1994, when Caliber was sold to Norwest Bank. From March 1990 to March 1994 he was the assistant director in the office of securities transactions at the Resolution Trust Corporation, where he was involved in the structuring and sale of residential and commercial mortgage backed securities. Raiter earned a BA in economics with honors from North Carolina State University and an MBA in finance from the University of North Carolina.
*See related story: Cornell's Johnson School and Law School Create Ethics & Corporate Culture Course – This course explores how corporate culture can lead good people to do bad things.
