IntroductionIt is interesting to observe the operations of commercial banks with particular attention to the ways and means put in place to address the risks that may arise. In this chapter, the researcher will examine the type of regulatory environment proposed internationally for banks and the type of changes that have occurred over time. The researcher will begin by addressing the reasons that led the international banking body to decide to adopt regulatory standards for all banks. In the same section the researcher will address an overview of the three standards that have been proposed over time. The first will be Basel I, followed by Basel II and finally the researcher will focus on Basel III and any underlying challenges that will need to be addressed in future proposals which will form the basis for this researcher's proposal for a new rating system specifically designed to address the problems of Lebanese banks. This researcher believes that the internationally established rating system does not allow for better ratings for banks in regions that have political instability, even if banks have the ability to perform better than in other regions that have political stability. In the second part of this research, we will focus on credit ratings and models, including rating systems, private rating agencies and the models they use in their grading. Emphasis will also be placed on private rating agencies and their adoption of the Basel recommendations and requirements for commercial bank ratings. This is the same part where the researcher will look at the origin of commercial bank ratings in the Middle East and Lebanon in particular. The reasons that lead to the low gradation of...... half of the paper......ountid=45049November, V. (2009). The bargaining process as a variable to explain the implementation choices of international soft-law agreements: The Basel case study, Journal of Banking Recommendations 10, 128-152. DOI: 10.1057/jbr.2008.23Pasiouras, F., Gaganis, C., & Doumpos, M. (2007). A multi-criteria discriminatory approach to credit rating of Asian banks, Annals of Finance 3, 351-367. DOI: 10.1007/s10436-006-0052-0Simmons, B. A. (2000). International law and monetary affairs. The Journal American Political Science 94(4), 819-835. Retrieved from http://search.proquest.com/docview/214404410?accountid=45049Smith, R. C., & Walter, I. (2002). Rating agencies: is there an agency conflict? 1-59.Welfens. PJJ (2010). Transatlantic Banking Crisis: International Economy Analysis, Ratings, Policy Issues, Political Economy 7, 3-48. DOI: 10.1007/510368-010-0155-y