Friday, May 14, 2010

Rating agencies (and Shari`a advising) need to be regulated by governments

In an interesting development, the U.S. government will now get more involved in regulating the business of rating bonds:
The Senate approved a provision that would thrust the government into the process of determining who rates complex bond deals, in a move to end alleged conflicts of interest blamed by some for worsening the financial crisis.
Likewise, I have often argued that Shari`a advising (rating of Islamicity, albeit on a 0 or 1 scale) should be regulated by government and staffed by salaried employees. This is not an ad hominem attack on any Shari`a advisors, as many like to suggest. It is merely good business practice.