Credit assessors are not the only ones to blame for credit crisis

Although it is mainly credit assessors that are under fire for their role in the credit crisis, investors and society share some responsibility as well. This statement comes from Bob Mohr of Corgwell CPI Governance.

According to Mohr, the assessors have most certainly made their share of mistakes. When evaluating blame there are two aspects that come into play. The first is the whether or not credit assessors play an independent role; the second is the responsibility of the users of those assessments.

Under the regime of the Basel Agreements and new audit standards, credit assessors have been forced into an important role. Although they never asked for this role, they did benefit from it; after all they are still commercial companies. 

Contrary to auditor's judgments and in spite of their important role, there are very few regulations, systems of checks and balances, and obligations applicable to credit assessors. Thus, there is hardly a regulating framework and that is where governments have neglected an important task. 

Finally, investors have shown that they are lazy and blindly trust the judgment of credit assessors. This is especially unacceptable in cases of large banking institutions.

Even if there were a certain period (e.g. sleep on it for a night) of only subconscious thinking about a certain affair, it would usually result in an inferior choice being made.

If people have enough time to research information or consult sources while contemplating their choice, they would have a relatively good chance of making the right decision. Decisions that are taken subconsciously can be influenced by irrelevant factors, such as how recent the information is instead of how important.

People have to be able to carefully weigh the benefits and risks of a choice. This conclusion runs contrary to the theories that claim fast and intuitive decisions often have the best results. This is what Malcolm Gladwell promoted in his book Blink - The Power of Thinking Without Thinking.

Source: financieel-management.nl