Dear ATCA Colleagues

[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]

We are grateful to:

* The ATCA Research and Analysis Wing (RAW), based in Canary Wharf, London, UK, for "Asymmetric Knowledge Risk -- Insurance Lessons for Sub-Prime Contagion;"
* Anthony Whitehouse based in Coppet and Geneva, Switzerland, for "High Credit Ratings and Breakdown of Trust;" and
* John Pickering, Vice-Chairman, Labour Finance and Industry Group, based in London and Tunbridge Wells, UK, for "Role of Auditors;"

in response to the ATCA QUERY: Role of Credit Rating Agencies.

Dear DK and Colleagues

Re: Asymmetric Knowledge Risk -- Insurance Lessons for Sub-Prime Contagion

In the present global subprime credit crisis, we have entered an era in financial markets when knowledge -- trustworthy information -- becomes much more valuable than money or prevailing monetary conditions. Consider two interrelated questions:

[CONTINUES] [ATCA Membership]

Best wishes

ATCA Research & Analysis Wing
____________________________________________________________________________

Anthony Whitehouse, based in Switzerland, has substantial experience in trust creation and administration and the management of offshore structures, especially as they relate to the administration of intellectual property. In addition, he has expertise in the business management of high net worth individuals in the entertainment sector. He has recently given up business to enter into the public ministry of his Church. Anthony entered the trust business as a senior manager with the Lausanne-based branch of a Bahamas Trust company in 1978 before leaving to join a major international bank in 1988 as manager of Fiduciary Services Operations in Geneva. Together with Richard Bittiner he set up Bittiner Whitehouse, an accounting and trust administration practice, in 1992. Bittiner Whitehouse was acquired by the Maitland Group in 2003. Anthony qualified as a Chartered Accountant in England in 1968. He obtained his MBA from IMD in 1973 and was one of the founding members of STEP in the French-speaking area of Switzerland. He speaks English and French. He writes:

Dear DK and Colleagues

Re: High Credit Ratings and Breakdown of Trust

Whether we can rely on rating agencies is symptomatic of a deeper issue of what levels of trust are available in all walks of life. With regard to the issue of whether we can trust rating agencies I must recount a short anecdote. A professor from my own business school, in a conference I attended, advised that one of the issues in the Enron case, which assisted those of its officers engaged in fraud was that one rating agency gave triple AAA ratings to some of its off balance sheet vehicles helping them finance some of the scams they thought up. And the reason? 25 vehicles at USD 25,000 a pop involves a great deal of income for a rating agency. And there were that number of vehicles involved.

[CONTINUES] [ATCA Membership]

Sincerely

Anthony Whitehouse
____________________________________________________________________________

John Pickering is the Vice-Chairman of the Labour Finance and Industry Group (LFIG) as well as being an industrialist. LFIG is a UK Labour loyal think tank that draws on the experience of senior managers, providing a practical filter for legislation. He is a graduate of Cambridge University in physics and engineering, Cranfield Business School as well a being a Fellow of the Institution of Electrical Engineers. He has gained worldwide experience in general management in the power field and spent a number of years managing power construction projects in Nigeria, Sudan and Iran financed by the World Bank. Since then he has been in telecommunications joining BT plc at privatisation to become their first head of commercial management. In more recent times he has been a director investor in a number of global enterprises. He writes:

Dear DK and Colleagues

Re: Role of Auditors

I would like to suggest we also raise the question of the role of auditors at Banks, in particular, in relation to recent financial indiscipline. Auditors have a duty to highlight to company directors any weaknesses in management control systems.

[CONTINUES] [ATCA Membership]

Yours sincerely

John Pickering

[ENDS]