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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (9627)	7/8/2008 11:47:49 PM
From: Hawkmoon	Read Replies (2) \| Respond to of 33421

Pension and money-market funds bought AAA-rated securities backed by mortgages to the riskiest borrowers because they offered higher returns than government bonds with the same ratings. In many cases, credit raters were paid by investment banks selling the bonds, prompting regulators and lawmakers to question their independence. Now.. the question is whether AMBAC AND MBIA have legal grounds to declare they were defrauded by the ratings agencies.. I was saying earlier this year that the ultimate culprits in all of this were the rating agencies. If they hadn't given their blessing to these products, it's likely they wouldn't have developed the demand that existed (or they would have been properly valued) and appropriate business risk analysis would have been applied. But now it seems that the "safeguards" they supposedly had in place were fraught with points of failure, represented by the human factors complicit in a conflict of interest. I smell major class action lawsuits in the offing that could have mortage re-insurers, and possibly even home owners, declaring their were deliberately defrauded by these rating agencies. And without credible credit raters, how can financial products be trusted?? If we worry about banks being too big to fail, I wonder how they perceive S&P, Moody's, and Fitch?? Hawk