Investing in different business ventures in the early part of the 20th century was not based on the same financial statistics that are used today. Most investors had to shoot from the hip in terms of finding companies that were financially stable. The railroad industry had Poor and Company and in 1906, Standard Statistics started publishing corporate ratings, but the business market was growing quickly so investors needed a more detailed rating system.
In 1913, John Knowles Fitch founded Fitch Publishing Company in order to give investors a better in-depth picture of the financial health of companies and their stocks. Knowles opened the doors of his newly created company in New York's Financial District and began publishing financial statistics for consumers investing in the New York Stock Exchange.
In 1989, Fitch Ratings went through a recapitalization and a completely new management team was put in place. During the 1990s, Fitch experienced growth in all areas of the organization. The company provided investors with better original research, clearer explanations of complex credit details and in-depth surveillance of financial changes within companies and the market.
Fitch Ratings merged with London-based IBCA Limited in 1997, and that merger significantly increased Fitch Ratings's worldwide presence. After the merger, Fitch Ratings became part of Fimalac SA, which is the holding company that purchased IBCA in 1992. Fitch Ratings officially became a full service worldwide agency from the merger with IBCA.
The new company continued to acquire other companies like the Chicago-based Duff and Phelps Credit Rating Company and Thomson BankWatch, both in 2002. Those acquisitions strengthened the company's coverage in the corporate, insurance and structured finance sectors, and their number of offices and affiliates around the world increased substantially.
The Fitch Group entered into an agreement to acquire Algorithmics, a leader in enterprise risk management, in 2004. Several years before the acquisition, Fitch Ratings extended its core business to credit risk management, and the purchase of Algorithmics, finalized in 2005, gave the company a firm footing in the enterprise risk management business. The Fitch Group sold Algorithmics to IBM for $387 million in the fall of 2011.
In 2008, the Fitch Group announced the development of Fitch Solutions, which enhanced the independence of Fitch Ratings's credit ratings and analytics. That division of the company has as its single focus the development of fixed income products and services.
Now a jointly-owned subsidiary of FIMILAC and the Hearst Corporation (which increased its stake in Fitch shares to 50% in April 2012), The Fitch Group has dual headquarters in London and New York and is considered a global rating agency that provides the world's credit markets with timely and independent credit opinions. Fitch Ratings and Fitch Solutions are both part of the Fitch Group.
It is unfortunate that, as the financial crisis of 2008 showed us, it is actually impossible for ratings agencies – such as Fitch Ratings – to predict the future or guarantee solvency. Every large institution in the world was at risk in 2008 and would have declared bankruptcy if not for central banking intervention in the tens of trillions of dollars.
Nonetheless, even despite this debacle, ratings agencies like Fitch persist and their ratings continue to be purchased. In fact, their ratings mean little or nothing as the system itself is prone to breakdowns and has proven unstable in ways that Fitch cannot and did not anticipate.
Like Moody's and S&P, the service that Fitch renders is only viable during the faux-stability offered by central banking money printing, which carries the seeds of its own destruction. Fitch ratings are a fiction, as is the entire industry.
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