Professor William Black:

No, it is clearly not fit for purpose. That does not mean there have not been improvements in some areas but you can see that they are still talking in very much similar terms, for example, cost-benefit analyses and econometric studies. If such studies are followed, you guarantee that you will do things that most facilitate the looting recipe I outlined. That would be an absolute disaster. You will still see that they do not understand the concept. I guess I am the first person that even used the phrase, "Gresham's dynamic" here. That dynamic is used. The testimony at the parliamentary inquiry in the UK highlighted that dynamic and the US has consistently sued institutions such as Standard & Poor's where the allegation after investigation is they engaged in fraud as part of a Gresham's dynamic. We have done that not just to those ratings agencies, but we have strong proof that this happened in the appraisal context. The then New York attorney general, now governor, Andrew Cuomo, found this in investigations. We found it in the top tier audit firm the Chairman asked me about. This is a pervasive problem and there is no Basel-type action to break this dynamic.