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China has a long tradition of such family-and-friend lending pools, which finance many entrepreneurial businesses whose creditworthiness may be hard for banks to assess.
Of course, Mr. Turner noted, the rating agencies face the same fundamental conflict that auditors face: they are paid by the companies whose creditworthiness they are evaluating.
If the United States government, whose creditworthiness has long been the lynchpin of the global financial system, gets its rating downgraded, the consequences could be disastrous, experts said.
They likely won't risk loaning money or extending credit to those whose creditworthiness is a big question mark or, worse, who have a track record of poor money management.
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The warning, from one of the agencies whose assessments of creditworthiness help determine interest rates, amounted to a stern reminder from Wall Street to Washington that global financial markets are watching the budget battle closely and that a standoff or brinkmanship could have economic consequences.
Market perceptions of bank creditworthiness undermined by concerns about sovereigns whose debt banks hold.
Moody's, which appears to be farthest along in its plans, is hiring 10 people whose job will be to assist the company's analysts in evaluating creditworthiness, starting with companies that carry large amounts of debt or that have potential accounting issues already identified by the agency, Mr. Jonas said.
The Fair Isaac Corporation, whose software is used by credit card and mortgage companies to measure consumers' creditworthiness, said yesterday that it had bought Narex and that the purchase would reduce profit this quarter by 1 cent a share.
MORGAN has also had to sue to force a group of insurance companies to honor the financial guarantees that the bank obtained to enhance the creditworthiness of another elaborate structured-financing deal it did for Enron, the oft-scrutinized Mahonia arrangements, whose fund-raising architecture included the use of various derivatives.
Whose crime and whose punishment?
Lisa Mihailuk, a senior vice president in Countrywide Home Loans' consumer division in Plano, Tex., said consumers whose accounts are sent to a collection agency because of medical debt are typically considered a lower credit risk than those with other types of unresolved debt, because the problem is seen as an isolated incident and not a sign of a consumer's overall creditworthiness.
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