I was surprised when my high rated mutual funds collapsed. Morningstar Ratings Bullshit!
Other raters: Standard and Poors. Moodys. Fitch.
Junk bonds depending on high risk mortgages received the same AAA ratings as the US Treasury.
Interesting CSPAN Congressional hearing on why Credit Agencies missing the investment value of the subsequent failures.
It is now known that there were plenty of people in these agencies that knew of the rising problems.
Yet the agencies continued to rate these risky companies highly.
Fitch rating company president, Stephen Joynt, said that as soon as they applied a strict realistic standard, their rating business dried up.
Congressmen Sarbanes observed ".... you didn't recognize misconduct, because you had no standard for conduct...."
AIG was rated AA 2 days before it went bankrupt.
"You have no creditability!"
Wednesday, October 22, 2008
Financial Kool-Aid
Letter from Iowa:
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"Someone needs to go to jail" Congressman Lynch in response to hearing about the rate shoppings of Moody's, S&P, & Finch.
See: http://dealbook.blogs.nytimes.com/2008/10/22/rating-agencies-draw-fire-capitol-hill/?ref=business
and ...furthermore "...there was no downside of providing inaccurate opinions....since they were only opinions....." Sean Egan Egan-Jones Co.
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