June 19, 2008
My comment relates to information provided in the context of so-called "balance sheet CDOs".
For the rating agencies to rate such instruments, they may need access to bank-internal rating models/rating scores.
Such information is typically subject to bank secrecy rules in particular if that information is associated with the particular client's name.
Accordingly, banks would be in a difficult legal situation if such information were to become public through the disclose obligations imposed on rating agencies.
As a remedy, such sensitive information should be audited by qualified professionals but not disclosed to the investors.