Prior to the 2007-2009 financial crisis, inaccurate ratings provided by credit rating agencies helped promote risk taking throughout the financial system.

Question

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The inaccurate ratings provided by credit rating agencies gave a false sense of security to investors and lenders, which encouraged them to take greater risks in the financial system. This contributed to the build-up of a large amount of bad debt and other risky investments, which ultimately led to the financial crisis.

Prior to the 2007-2009 Financial Crisis, Inaccurate Ratings Provided by Credit