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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (28645)	10/21/2007 1:32:08 AM
From: Madharry	Read Replies (2) \| Respond to of 78714

I believe that this is a case where the bloom is off the rose. Perhaps I am paraphrasing WEB here but in a business like this all one has is ones reputation and credibility. Once thats shot youre finished. Will an investor ever rely on a Moody and S&P rating again? I doubt it. Perhaps sellers of their securities will keep paying for the ratings but I dont know how long that will last. Cause if Im the head of investment group, or a money manager I sure dont want to hear about their ratings anymore I want the analyst to do his/her own analysis before I buy in. Sorry, but there is no way to justify an AAA rating on the deal that I described. It is nonsense to base a rating only on what happened historically for a brief period of time and not apply common sense and what-if scenarios. Just like you wouldnt immediately put money with a money manager who had a terrific track record for 3 years because he was 100% invested in energy stocks.

To: Paul Senior who wrote (28645)	10/21/2007 10:52:51 PM
From: Spekulatius	Read Replies (1) \| Respond to of 78714

MCO Yes, maybe they will be so sued. It's not relevant to their stocks though (imo). it will be relevant if the damages that MCO is going to be sued are significant to their market cap. Since the losses from CDO and such stuff are going to be staggering ( a few 100B$, I think), it is conceivable that the lawsuits would sink MCO and the like. They agencies will argue - imo successfully - that they gave good faith estimates; they have had nothing to gain by intentionally issuing wrong calls; they are raters which means they offer opinions; they are not people who are promisors or guarantors; and they made reasonable conclusions with the info they had at the time to make the opinions they made. <i/> This case is different then Enron. With Enron MCO had not much to fear because they had no or very little inside information. But is is notable that Arthur Anderson, which helped Enron to fabricate their numbers went under because of their liability involved with Enron. I believe the situation that the rating agencies are finding themselves in, is much more like Arthur Anderson in Enrons case. MCO ratings were developed with the issues of those now infamous papers. They were paid with the issuers and a significant part of their revenue stream depended on this business. They developed the rules of the game and they did the rating. Without them, there probably would not be a market for those CDO papers. So I think they will get sued for substantial amounts of money, right fully so in my opinion.