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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: ggersh who wrote (101641)	2/24/2009 4:16:57 PM
From: Hawkmoon	1 Recommendation Read Replies (1) of 110194

Rating agencies rated junk to high and the Govt does what it does best, nothing. A never ending circle of love! <ng> Yep... ;0) But I think one of the factors not really being sufficiently focused upon is that near monopolistic control over credit ratings by S&P and Moody's. If you've followed Barry Ritholtz's battle with McGraw-Hill (owner of S&P), you'll see they are taking great strides to stifle (censor?) criticism over their incestuous relationship with the IB's that packaged most of these CDO's and ABS'.. portfolio.com seekingalpha.com ritholtz.com So how do we solve this and RE-CREATE the financial surety and credit rating industry in order to restore confidence to the global financial markets? Well.. IMO, it's going to require a hybrid of the revamped and regulated RA's and analysis from the participants in the financial surety industry who will be writing the coverage. It's pretty clear that S&P and Moody's can't be trusted to perform rating services on their own. But then again, the monolines have an interest in maximizing the premiums they require for the specific level of risk they are taking on. The answer lies somewhere in the middle. This is CRITICAL, IMO.. you can't lend if people have no ability to reliably assess credit risk and mitigate financial losses. Hawk

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