Financial Safety and Fire Safety

This guest post was contributed by engineer27, a longtime reader of and frequent commenter on this blog. (I had exams this past week, which is why I haven’t posted in a while.)

This Thursday, the Senate added two amendments to the Financial Regulation in process that deal with Nationally Recognized Statistical Rating Agencies (NRSROs), which are blamed for being a factor in the financial crisis of 2008. The most widely cited problem with the NRSROs is the inherent conflict of interest which resides in the “issuer pays” model currently in use. However, even supporters of doing something are stymied when trying to envision a workable solution. The two (perhaps contradictory) amendments each try to implement a proposed solution that runs into some of the critiques. The Franken amendment has rating agencies assigned to debt issues by a neutral arbiter; critics maintain that lack of competition may reduce the quality of analysis. The LeMieux amendment removes legal mandates to obtain a NRSRO rating and the preferential treatment those issues currently receive. However, it leaves out details about whose advice agencies and public trusts should seek out instead.

This is not such a difficult problem. We already have an example of a successful private rating agency, whose imprimatur is desired or in some cases required by law, that is paid for by fees on the seller, and has been operating since 1894: Underwriters Laboratory. The UL publishes safety standards for almost 20,000 different types of products, many of which are adopted by other standard-setting organizations like ANSI (American National Standards Institute) and Canada’s IRC (Institute for Research In Construction). Although generally not actually required by federal law, the sale of many types of products in the US would be difficult without UL listing. Also, many local jurisdictions responsible for building and fire codes mandate the use of UL approved products. In all cases, the manufacturer must submit samples and pay fees to UL in order to win approval.

The comparison to NRSROs is apt. In both cases, a third party sets standards based on theory, models, and best practices. In both cases, the issue is the assessment of risk by experts in that type of risk. In both cases, approval is desired by the market or required by local ordinance or rules. And in both cases, the seller pays the fees; so the third party might be led to relax their standards in order to capture some extra fee income. Yet in the case of fire safety the model has been functioning well for over 100 years, but in financial safety there has been a rash of fires as one rated product after another has blown up. Why?

There are a few key differences. Until 2007, UL was completely non-profit, so as long as user fees covered their costs there was little incentive to chase extra revenue by relaxing standards. There is no real competition in the US market for UL (although Europe has its own standard-setting body that manages the ), so manufacturers have little leverage to push for easier standards. The LeMieux amendment could allow for the creation of a not-for-profit entity to take the place of NRSROs, while the Franken amendment would reduce competition, limiting it to delivering a better, more reliable rating rather than adjusting standards to capture fees.

Critics of the amendments, including those who support a buyer-pays model, need to address the question of why the UL model for risk assessment has worked well, and why it can’t be applied to debt rating. Is the model broken? If so, I expect a rash of building fires any day. Is rating of financial safety fundamentally different than, say, electrical safety?

We should applaud the Senate for including important reform of NRSROs in the Financial Regulation package. If they are retained, collated and reconciled in Conference Committee, the door will be open to emulate a successful model that provides a comfortable revenue stream to fund improvements in service, and safety and soundness for all.

40 thoughts on “Financial Safety and Fire Safety

  1. This is a thought-provoking question, but I think that the analogy between UL and the NRSROs doesn’t take one very far. The products that the organizations rate are just too different, and the chief difference is simply that UL-rated products are tangible. As a result, it doesn’t generally pay for manufacturers to game the approval process by adding complexity that hides fundamental safety deficiencies. In the world of tangible products, increased complexity almost always equals increased manufacturing costs and lower expected profit. By contrast, in the securities world, increased complexity has a negligible impact on the cost of “manufacturing” the security and can result in a higher expected profit to the issuer and underwriter by hiding features that accrue to their benefit.

  2. When a fire happens, it can generally be traced to a single root cause, or maybe two (e.g., somebody was smoking in bed + the sprinkler system failed).

    Put another way, the conditions that cause physical failures do not change from year to year, because the laws of physics do not change.

    As a result, if UL failed to do their job properly, it would be pretty easy to tell. It would not even take an expert.

    In the financial sector, the top experts always disagree about what is safe and what is dangerous. That is the nature of the sector.

    The financial sector is different because its “laws” change daily. The cause of the crisis was not ratings agency failure. The cause was a universal desire to get something for nothing combined with low interest rates. Had the ratings agencies tried to be careful, they would simply have been ignored, because nobody wants to hear about risks when they see their neighbors are getting rich doing nothing year after year after year.

    Fixing the incentive structure is the only hope. And it is not a very good one.

  3. I don’t think this is a bad post. It has some good points and is well written. But I think the incentives to lie are much much smaller for UL and IRC. And the commenter “Curious” makes and excellent point about the tangibleness of the different products. It’s not so easy to “unpack” a CDO, know the true balance sheet of a huge corporation, or discover counter-party risks etc. as it is to open a pack of light bulbs or turn on the radio at Wal-Mart and see if it works. Even inspecting a building’s construction might be easier than looking at an investment Prospectus in many cases.

    I appreciate Al Franken’s efforts, and they may indeed be an improvement over the current situation, but Franken’s attempt seems slightly naive. For example, what is to stop Franken’s “neutral arbiter” from turning into a facsimile (in non-enforcement of regulation) of John Dugan’s Office of Comptroller of the Currency (OCC)???

  4. I think that the commenters here have answered engineer27’s proposal quite well; financial instruments are abstract social entities whose efficacy or risk is subject to debate and to socioeconomic conditions over the life of the instrument. Fire safety is much more easily defined as direct physical testing validates human opinion.
    The financial ratings organizations in effect are attempting to rate the propensity of humans to take risks, which is a constantly moving target AND involves a constantly changing measuring tool, another human. This in itself seems to be a fool’s errand. The solution would indeed seem to be to remove the incentive towards excessive risk taking, but this would require deconstructing most of the debt financing schemes that give money an existence independent of the physical processes that it is supposed to only reflect.

  5. As with everything on Wall St., the problem is money. The ratings agencies rely on people with expertise, but those same people have the ability to command multi-million dollar salaries, so why would they work for a rating agency that’s going to pay them much less? So you either pay through the nose for talent, raising the costs of doing business (and the accompanying temptation to cut corners for the sake of revenue/bonuses), or you accept that you’re going to get the bottom of the barrel talent, in which case the top of the barrel talent will run rings around them (which is basically the situation we had pre-2008 and ongoing). A talented person who works for UL can’t go work for one of the manufacturers for 10 times the money. A talented person who works for one of the rating agencies can. This is an extremely difficult dilemma. I’m tempted to say we should set up a group of well-paid and highly talented experts to do the ratings, paid for by a fee on transactions, but I’m not sure it would work.

  6. Sure it would work, if the fee were fixed. To keep the talent happy it always takes money in the US. The fee could be very simple , say 1/2 % of transaction values paid by the buyer into a pool to pay ratings agencies. That said, there are no foolproof arrangements. If one looks for perfect solutions no solution will ever be found.

    For comparison, political campaign funds could be pooled also using an annual citizen head tax. Let’s say a $50 per citizen tax stamp required for drivers’s licenses and any a number of other essential state needs. Let the states collect the tax into a fund since all but two federally elected persons arise at the state level. Each state then has a pool for allocation to elections. The big fight and dirty tricks will be getting the funds allocated to them if they are challengers. The next area of connivance by incumbents is how the pool is allocated by type of election at primar ies.

    Both ratings agency payments and campaign fund payments allocations suffer from the same common problem: perversion of the allocation. If the allocation of payments issue is not solvable, one must address the entire issue of democracy itself as a viable concept.

    All the angst against the financial system really goes back to the fundamental question of societal allocation of valuation of productive effort. That problem has always existed and always will.

    If a workable allocation of societal decisions to pool certain efforts for the public good cannot be made, the question of democracy itself is answered. A failure.

  7. This regulation is also cost effective. William K. Black argues that the rating agencies are the choke
    points in the system. Fixing ratings would prevent a lot of fraud that went on from 2000 to now. It’s a shame that it took a disaster to try to fix the system. If the ratings agencies had been forced to rate investments properly before 2005, we might not be in the pickle we are in. I expect that these amendments could die quietly because a lot of people would not be able to sell bad products at such high prices any more. It’s kind of sad that finance has become a swindle.

  8. If there is no cultural predisposition towards moderating personal aggrandizement so as to support a sustainable commons, democracy will fail.

  9. [Insert Standard ignorance disclaimer here.]
    I thought ratings agencies USED to work but there was a change in the law that changed their incentives.

    What was wrong with the old (post Great Depression) way?

  10. Sorry if I digress … would something like this work: The rating agency and the insurer are the same entity. They protection buyer pays for the rating.

  11. I have also come to the conclusion that incentive is the crucial problem.

    So far the only solution to that I can think of is total clawback of pay and bonus.

  12. I wanted to say something similar to what Lance wrote.

    It could be called regulatory capture. Imagine you’re working at some hypothetical financial UL. Your dream is probably to work for the financial institutions you’re supposed to rate. If you go easy on them they might reward you afterward and offer you some well-paid meaningless position.

    I’ve heard that in some countries (Poland and Singapore?) regulators are traditionally as well paid as the financial counterparts they regulate.

    A more profound question is:

    Why is the financial sector earning so much money?

    They will argue that they’re the most productive. I will argue that they’re simply closest to the money spigot. In view of the results, typing monkeys would have done a better job.

    If we strictly limit the amount of money the financial sector can earn the problem will also be solved.

  13. Makes sense to me. If I were an insurer I wouldn’t want to blindly rely on some rating agency. I would do my own research.

  14. My distillation for the week: There is market fundamentalism and there is — mathematical fundamentalism — which is an irrational faith in quantitative analysis.

  15. The fire insurance, code and listing approval system to ensure safe buildings isn’t perfect. Contributions and politicking can be used to mandate truly unnecessary modifications to code. But this happens very rarely. To the best of my knowledge, UL has never approved an unsafe product. And why defacto corruption CAN add unnecessary costs to building, the approval of unnecessary safety products has never made a building LESS safe. The model works.

  16. Why should there be ANY Nationally Recognized Statistical Rating Agencies?

    I’m curious.

    What a recipe for trouble. It excuses people from doing their due diligence and passed the buck and blame when things go wrong. Allows pension funds to do buy whatever if the NRSRA say so.

    I don’t like the idea of this at all, not to mention the incentives for corruption are higher than ever. 7oo trillion of bets on a few rating agencies?

    Every buyer should be responsible for their own assessment. Rating agencies have created a command market as much as the Soviets. We just suffered through the ramifications of their propaganda. Where did they get their own credit and credibility? Through a statute? Are you kidding me?

    Are we to believe with conflict of interest legislation, bribery will go away? You could pass legislation that would wire every office in these companies on a 24 hour feed, I still wouldn’t feel comfortable.

    Eliminate the concept entirely. Buffett doesn’t buy a company unless it’s protected from competition. Can you believe he would buy Moodys?! That really says it all. Now, he’s selling because the model has been discovered to be what it is: a confidence game.

  17. We just have to STOP “managing” or tweaking market fundamentals. It’s too seductive for all sides of the political spectrum. We are giving credibility to rating agencies with the ink of a pen. What’s worse, is they may come out of this with more, after legislation, when they should have NONE. Just pass a statue that says you’re responsible for your own purchases, if people forgot this. Then, pass another one that makes any rating agency legally responsible for aiding and abetting fraud and doesn’t allow ANYONE to use a rating as a defense.

    I think we’re in more danger by propping them up and giving them “reform street cred”. I can already hear the excuses from 2014. “Well, after the reform bill we thought….”

    Eliminate any perception of government sanction. Force each rating to include a DISCLAIMER summary of their ratings disasters in the 00’s. “This rating could be the result of conflict of interest. The rating industry is often wrong. You should not rely on this rating to buy but only use it to further investigate the underlying numbers and models used. Our models are often inaccurate. Our models often lag the market”.

    Make them and all who use them disclaim in bold, black, underlined, with increased font size on the first page. Then, let’s hear what the pension fund manager says in front of the jury about relying on everyone to do his highly paid work.

  18. meant to write “banks and pension funds”. I’m not just picking on the pension funds!

  19. In such an environment, the rational response would be for the potential investor to stay far away, as few working folk have the time to develop the skills and experience to accurate assess such risks. But retirement savings having to go somewhere, large pension funds and the like would still exist, and would likely strengthen. I don’t see the problem going away with the elimination of rating agencies.
    Somewhere in the system there has to be an element of trust, otherwise it is impossible to maintain a complex society that efficiently allocates resources.
    I worked for a company that mistakenly believed that if the low-level manager was responsible for everything – hiring, relocation management, human resources, technical oversight – you’d get a better result than the usual bureaucracy would provide. The result was chaos, because it was impossible and horribly inefficent for that manager to know and manage everything required of them. Some specialization is beneficial.

  20. “As with everything on Wall St., the problem is money.”…………………

    A talented person who works for UL can’t go work for one of the manufacturers for 10 times the money. A talented person who works for one of the rating agencies can. This is an extremely difficult dilemma

    Which I can tell you, without question, is also the “problem” with UL. (Not that there are many “talented person”s working for UL).

    The true irony of this article is that Underwriters Laboratories is yet another example of a captured regulator.

  21. Yep, and if the insurer and the rating agency were the same entity, you would get competition. Better still make this entity hold skin in the game; eg, 50-100% of this entity could not be incorporated as an LLP.

    Just musing …

  22. Except that if the CDOs were properly rated according to risk they could not have been sold. If they could not have been sold, there wouldn’t have been the stated income and liars loans because the funding would have vanished. The AAA rating was necessary.

    Also, as to the post, see also the FDA which approves new drugs only if they are safe and exist for a reason (benefit is greater than risk). A drug company cannot bring a drug to market just to make $$.

    “Drug companies seeking to sell a drug in the United States must first test it. The company then sends CDER the evidence from these tests to prove the drug is safe and effective for its intended use. A team of CDER physicians, statisticians, chemists, pharmacologists, and other scientists reviews the company’s data and proposed labeling. If this independent and unbiased review establishes that a drug’s health benefits outweigh its known risks, the drug is approved for sale. The center doesn’t actually test drugs itself, although it does conduct limited research in the areas of drug quality, safety, and effectiveness standards.”

  23. “Fixing the incentive structure is the only hope.”

    No, it is not. There are two hopes –

    1) Fix the incentive structure, and permit the continued existence of a wide range of financial “innovations”, on the presumption that these innovations improve the social allocation of capital/investment by tailoring risk, etc.

    2) Recognize that the value offered by many innovations is illusory, and radically simplify the system by removing choices – thereby enabling regulation by reducing the rate at which the financial structure changes. Let’s call this the KISS option – keep it simple stupid.

    One camp favors fixing the incentives. This camp is led by Larry Summers within the administration.

    The other camp believes that most of the financial innovations of the last 20 years are worthless, and that we should simply legislate them out of existence.

    Both camps have not addressed the political question – how to prevent incentives from being corrupted or innovations from creeping into the system as the financial sector systematically disables regulatory bodies (like the SEC) through political channels.

    Interesting article (by way of zero hedge):

    Core point:

    “The invisible hand, however, naturally wanted to get the oligopoly profits associated with banking while reducing the impact of some regulation. Thus, the Shadow Banking System came into existence, where the net interest margin associated with maturity, liquidity and quality transformation could be earned on a much smaller capital base.”

    As shadow banking expanded, the core problem for the regulators became that the effects of a shadow bank run were very real, forcing them to backstop the dark pools, but they couldn’t (or, because of political reasons, wouldn’t) regulate those pools. Ratings agencies were impactful not because everyone really believed them but because they established the quasi-legal standards for capital/asset ratios.

  24. Maybe we could learn from rating agencies in other countries, best practices study ? Fees could go in a collective pool so there’s no incentive to suck up to any particular company. Given the loses to the economy, home values , jobs and families we need strong incentives to protect us against future loses. Maybe accuracy bonuses after 5 years for how close they come to an accurate rating.

  25. Jerry,
    Another question, I haven’t seen addressed in Franken’s amendment, or in some long comments on incentives above, is the question of the “revolving door”. Is there any part in Franken’s amendment or the general law which states no member of the “neutral arbiter” could re-enter the banking industry or companies he rates at least 10+ years after he leaves his membership on the panel of the “neutral arbiter”???

    I think if Al Franken had even done a semi good survey of this issue and wasn’t just trying to score quick and useless political points, he might have addressed the “revolving door” issue between his “neutral arbiter”—the companies it rates—and the banks issuing the paper it rates, in his amendment.

    If you look at it, Franken’s amendment does almost nothing to solve the problem, it just changes the terminology and then we’re all supposed to think what a great guy Franken is.

  26. jestbill,
    That was before Senator Phil Gramm threatened the SEC every 5 minutes he would cut SEC funding if they actually did their jobs and Phil Gramm told the CFTC that derivatives and swaps didn’t need to be regulated.

  27. I think making the rating agencies liable if they are negligent in performing their duty would go a long way to help align the incentives.

  28. Al Franken comes to the Senate with some Minnesota background, such as their high state requirement for health insurance companies to spend ~80% of their income on paying medical care costs for the insured.

    From Common Cause, I learned that their “public [campaign] financing system was enacted in the 1970s and significantly reformed in 1993. It was the first state to provide public financing for both legislative and gubernatorial candidates and is generally considered one of the most successful campaign finance systems in the country. Candidates who agree to a spending limit receive public funding equal to 50% of the limit. Public funds come from a tzx check-off that allows taxpayers to direct those funds to a qualified political party and from an annual appropriation. In addition, a unique program allows anyone contributing up to $50 to a party receives a refund from the state.” Text of the bill here, and Enforcement Agency website here.

    Al may well be thinking of similar arrangements for paying rating agencies.

  29. “Is rating of financial safety fundamentally different than, say, electrical safety?”

    In a word, yes. Two factors.

    First, the influence of UL is, in my view, very small on safety. Bigger influences are building codes and, to a lessor extent, consumer organizations such as Consumer Reports. When you last bought an appliance or had one installed, did you check carefully to see if it as UL listed? I’d be surprised if you checked at all.

    In the case of building codes there are fairly powerful organizations who have a vested interest in promoting the imposition of safety requirements and their influence more than offsets the pressure from builders and equipment manufacturers to lower safety requirements.

    Who are these folks? The trades unions and the local government inspection agencies. Moreover, repair and installation firms – mostly local – see the codes as a way to reduce competition and discourage owners to repair or upgrade their own plumbing or wiring.

    It also can be advantageous to the manufacturer to increase safety standards – ground fault interrupting outlets cost more and thus result in higher returns to the manufacturer as one example.

    Thus the “capture” of the regulators of electrical equipment has significant pressures to increase standards. THIS IS NOT THE CASE IN THE RATING OF FINANCIAL INSTRUMENTS.

  30. The way I see it is that there are two main differences between the “UL industry” and the financial industry.

    First, the amount of money. Perhaps the only reason the UL industry has not exploded is the staggering differences in compensation and money on the table.

    Second, the types of people generally involved in the two industries. The UL industry is generally made up engineers and the Main street people. We all know who is involved in the financial industry. They are not the best and the brightest. Most of their incentives and innovative products have to do with avoiding taxes or regulations for themselves or their clients.

  31. I didn’t realize that competition is required for us to do our jobs. Even better, maybe competition is inherently detrimental to certain types of task. Ratings, regulations and enforcement do not benefit from competition. This is very similar to the situation in the courts with forensics experts. In every case of corruption involving forensics experts falsifying investigations, it is cited that forensics experts who provide testimony that doesn’t support the cases of prosecutors don’t get called back. The result are forensics experts who only provide testimony that helps the case of DAs.

    I guess we threw common sense off the train a long time ago. A UL like entity doing the ratings sounds highly efficient and prudent. The only issue that I could think of is if the raters end up worshiping at the feet of the market they’re supposed to be rating, much like the Minerals Management Service. If reports are correct they still attended Oil Industry gala events and other lavish affairs; hobnobbing at every turn with the industry they were tasked to “oversee”. Hopefully if the UL like proposal receives a go, they can structure it to address potential areas of conflict like going to Wall Street parties and such.

    This factor is also similar to reporters having increased access to politicians and other powerful figures. For some reporters, the access becomes paramount at the expense of objectivity potentially and occasionally the truth.

  32. The analogy between UL and rating agencies is simply a bad analogy. There is a tremendous difference between gauging default risk and testing materials, primarily that the performance of the “product” involves a human element.

    A credit rating represents the rating agencies’ opinions about two things: the borrower’s ability and willingness to meet its contractual obligations. Both of those things involve more subjectivity than most people would care to admit. (I daresay approaching credit risk like an engineer is part of what got us into this mess in the first place.)

    You can test the properties of plastic under certain conditions and reasonably expect the material to behave the same way going forward. To gauge default risk, the best you have is an appreciation of how similar instruments have behaved historically and common sense about how they might behave if historically related things change. And with innovative products, even that much is a challenge. (There is also the issue of fraud…)

    The thing about the rating agencies’ incentive structure is that they took what was already a pretty subjective process and added pure recklessness to it. We want to use ratings as a proxy for credit risk on complicated transactions, and in reality those ratings are basically negotiated.

    Another thing is that people tend to treat ratings as if they are something they are not. For example, people think that a high credit rating means that an instrument will be relatively liquid (the failure of the auction rate securities market is a prime example). Investment positions involve different kinds of risk and the percerption of those risks for an asset class can change the dynamics of the credit markets in a way that influences default risk, but they aren’t the same thing.

    At the very least, we can take the recklessness out of the rating agencies’ business model. But if you want a proxy for credit risk – and you want to outsource the analysis involved – you are going to have mistakes.

  33. Perhaps for the same reason that UL exists. Would you like to see UL eliminated? The entire thrust of the article is the analogous relationship between rating construction materials’ safety and rating financial instruments’ soundness. Do you want to engage in due diligence for replacement electrical outlets?

  34. The business of rating is less scientifically precise than the tangible physical products rated by UL. But is that a good reason to eliminate it altogether? How are any but the most sophisticated investors to evaluate financial instruments? To abandon evaluation because it’s imperfect is far less perfect!!

  35. The UL apparently has no for-profit competition. A new non-profit rating agency would have three large for-profit competitors who continue to have 97% market share despite their apparent failings and the existence of a competitive fringe. Maybe investors would suddenly switch to the new non-profit agency, but that seems speculative given the poor performance of competitive rating agencies in the recent past.

    People should understand that the LeMieux amendment removes only statutory references to rating agencies, not regulatory references. The latter are probably more important, although the question has not been adequately studied, in my opinion.

  36. Publius comes closest to correct in my view. The underlying flaw is when a money manager views ratings as outsourcing at least a portion of their due diligence, while the ratings agencies views issuers as clients to woo.

    The UL analogy breaks down on 2 fronts. As already mentioned, tangible goods have physical properties that must obey chemical and phyical laws. Financial products may be made to behave in ways quite different from the underlying. Secondly, the makers of toasters and light bulbs may earn a cent or 2 more if they get away with using a substandard component, while financial engineering allows you to earn significantly more if you can get away with BBB collateral in a AAA shell. The payoff for successfully accomplishing quality arbitrage is huge.

  37. The underlying assumption here is that UL does a good job. Having just spent four years trying and finally succeeding in getting a new class of fire suppressant authorised by UL (one that had already been approved by various non US agencies including UL Canada), I am deeply sceptical of applying the UL model to financial regulation. UL is fine with “me too” products, it is horrible tackling innovation.

  38. There is another real-world solution to this problem.
    Look to the residential real-estate brokerage business. We had the same problem. Seller hired and paid the broker, who represented both seller and buyer but had fiduciary duty only to seller. About 20 years ago, we transitioned to a new paradigm where the buyer ALSO hires a broker, who has a fiduciary duty to the buyer. Now, the seller-broker and buyer-broker split the sales commission, which is paid entirely by the seller.

  39. Comparing UL to ratings agencies is not that valid but there are similarities that are apt:

    1) Often inspectors and test labs like UL know less about the sandards than the people employing them. Sound familiar?

    2) UL is in competition with other labs, such as CSA, TUV, and Intertek. There is still incentive and pressure for them to pay the bills and sustain their activities, even within a not-for-profit infrastructure.

    3) I can’t tell you how many times UL engineers must have listened to engineers trying to find creative ways around regulations. Most standards worth reading these days have reasonable annexes that outline the spirit and intent of a specific requirement. When in doubt there is almost always a judgment call involved by the inspector and incredible pressure to see “reason.”

    4) Liability and legality are huge concerns within UL and other labs. An interesting fact for those interested to look into is how often UL and other similar bodies have been successfully sued. For CSA, which I am more familiar, they have rarely been successfully sued. The buck always stops with the manufacturer; certification merely gives customers some sense what they are buying is legit but when TSHTF, as it sometimes does even in fire code land, the standards bodies are usually off the hook. This is a huge difference since when TSHTF in bond-land, lawsuits are almost always attempting to squeeze blood from a stone.

    5) Even if a bond is backed by complete shite, it still gets a rating. UL does not judge how well a product meets a standard, only that it does.

    I agree that incentive structure will help but you can’t regulate people from themselves.

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