Egan-Jones Rating Company, also known as EJR, was founded in 1995 and actively rates the credit worthiness

Credit risk

Credit risk is an investor's risk of loss arising from a borrower who does not make payments as promised. Such an event is called a default. Other terms for credit risk are default risk and counterparty risk....

 of approximately 2000+ high yield

High-yield debt

In finance, a high-yield bond is a bond that is rated below investment grade...

 and high grade U.S. corporate debt

Corporate bond

A corporate bond is a bond issued by a corporation. It is a bond that a corporation issues to raise money in order to expand its business. The term is usually applied to longer-term debt instruments, generally with a maturity date falling at least a year after their issue date...

 issuers. Egan-Jones is wholly supported by investors to minimize the potential for conflicts of interest

Conflict of interest

A conflict of interest occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other....

 in accessing credit quality. On Dec. 21, 2007, the SEC granted Egan-Jones NRSRO

Nationally Recognized Statistical Rating Organization

A Nationally Recognized Statistical Rating Organization is a credit rating agency that issues credit ratings that the U.S. Securities and Exchange Commission permits other financial firms to use for certain regulatory purposes...

 status, thus including them in a group of what is currently ten recognized NRSROs.

The effectiveness of Egan-Jones' investor supported credit ratings has been measured by third parties including Richard D. Johnson of the Kansas City Federal Reserve, the Stanford University

Stanford University

The Leland Stanford Junior University, commonly referred to as Stanford University or Stanford, is a private research university on an campus located near Palo Alto, California. It is situated in the northwestern Santa Clara Valley on the San Francisco Peninsula, approximately northwest of San...

 Business School and the University of Michigan's Business School.Studies

Sean Egan, principal of Egan-Jones Rating, appeared before Congress on October 22, 2008 and argued that issuers of complex securities "shopped" for ratings which resulted in a race to the bottom

Race to the bottom

A race to the bottom is a socio-economic concept that is argued to occur between countries as an outcome of regulatory competition, progressive taxation policies and social welfare spending...

 in terms of credit transparency. Rather than "beat up Moody's and S&P for behavior" they'd been financially motivated to pursue, the government needs to support a new business model

Business model

A business model describes the rationale of how an organization creates, delivers, and captures value...

paid for by investors, not issuers, to support the funding ecosystem which has so severely broken down, he asserted. Citation here: Congressional Record, Oct 22, 2008: https://house.resource.org/110/org.c-span.281924-1.pdf

Egan-Jones on July 16, 2011, became the first NRSRO to cut its rating on the United States from AAA to AA+.