Bloomberg (August 28)
“India’s economic numbers have for some time looked better than the facts warranted, feeding an overconfidence in New Delhi about the country’s prospects. Thankfully, that’s begun to change. The Reserve Bank of India, the International Monetary Fund, investment banks and ratings agencies have all recently cut their estimates of 2019 growth sharply.” This is “best news in years… India’s government finally seems to recognize the scale of the problems it faces.”
Tags: Economic, Estimates, Government, IMF, India, Investment banks, Overconfidence, Ratings agencies, Reserve Bank of India, Scale
USA Today (August 7)
“The United States’ unquestioned AAA credit rating is gone, for the first time ever.” S&P’s downgrade was not a surprise, instead it “merely confirmed what anyone with their eyes open for the past decade or two already knew: The U.S. has a huge and growing debt problem that it is resolutely unwilling to solve.” USA Today points out one silver lining. The U.S. is not incapable of solving this problem, merely unwilling. Another silver lining is that two major agencies (Moody’s and Fitch) still assign the highest rating to U.S. debt, which continues to be highly sought by investors worldwide.
The Wall Street Journal (July 23)
According to the Journal, the “one significant achievement of the Dodd-Frank law” was the “requirement that regulators break the cartel of ratings agencies that helped ignite the 2008 financial crisis.” The journal does not want to see a retreat, but foot dragging is slowing the process. Ratings cartels systematize risk. Ultimate responsibility for risk should be decentralized to those making the decisions. Credit ratings companies should compete in the market to provide the best analysis.
Tags: Dodd-Frank, Ratings agencies, Systemic risk
Financial Times (July 10)
Ratings agencies have come under considerable criticism since the Lehman crisis. Most recently, European leaders have heaped scorn on them after Moody’s downgraded Portugal to junk and S&P evaluated a proposal for a Greek debt rollover as a selective default. This time, the ratings agencies are addressing truths that are difficult to stomach. “We have to thank the rating agencies for giving the eurozone’s policymakers a clearer vision of which strategies are feasible, and which are not. It is now time to get serious.”
New York Times (April 19)
S&P lowered the outlook for the credit rating of the United States. Credit rating agencies are suspect—anything they “say has to be taken with a block of salt.” Still, this latest move by S&P may be a good thing. The downgrade should focus the minds of the Government on determining a sustainable budget. While the ratings agencies “squandered their credibility” leading up to the sub-prime crisis, S&P did well this time in sending a powerful warning.S&P lowered the outlook for the credit rating of the United States. Credit rating agencies are suspect—anything they “say has to be taken with a block of salt.” Still, this latest move by S&P may be a good thing. The downgrade should focus the minds of the Government on determining a sustainable budget. While the ratings agencies “squandered their credibility” leading up to the sub-prime crisis, S&P did well this time in sending a powerful warning.
Tags: Budget, Ratings agencies, S&P, Sub-prime crisis, U.S.
New York Times (May 2)
Lashing out at Wall Street Banks is now an American pastime, but the credit ratings agencies “bear as much responsibility for the financial crisis as the banks.” Largely forgotten is the role Moody’s, S&P and Fitch played. Investors and financial institutions would never have purchased as many mortgage-backed securities and collateralized debt obligations (CDO’s) had the raters properly warned investors that these were essentially “high-tech junk bonds,” rather than triple-A securities. Current proposals aimed at reforming the ratings agencies are not enough. The newspaper supports drastic steps to improve the ratings system.
Lashing out at Wall Street Banks is now an American pastime, but the credit ratings agencies “bear as much responsibility for the financial crisis as the banks.”
Largely forgotten is the role Moody’s, S&P and Fitch played. Investors and financial institutions would never have purchased as many mortgage-backed securities and collateralized debt obligations (CDO’s) had the raters properly warned investors that these were essentially “high-tech junk bonds,” rather than triple-A securities. Current proposals aimed at reforming the ratings agencies are not enough. The newspaper supports drastic steps to improve the ratings system.
Tags: Banks, CDOs, Fitch, MBS, Moody's, NRSROs, Ratings agencies, S&P, U.S., Wall Street
New York Times (April 26)
Nobel winner Paul Krugman writes rating agencies, such as Moody’s and S&P, were at the heart of the financial crisis. “Of AAA-rated subprime-mortgage-backed securities issued in 2006, 93 percent….have now been downgraded to junk status.” E-mails show the ratings agencies bent rules to get business and “skewed their assessments to please their clients.” Krugman calls for fundamental reform of the corrupt ratings system.
Nobel winner Paul Krugman writes rating agencies, such as Moody’s and S&P, were at the heart of the financial crisis. “Of AAA-rated subprime-mortgage-backed securities issued in 2006, 93 percent….have now been downgraded to junk status.” E-mails show the ratings agencies bent rules to get business and “skewed their assessments to please their clients.” Krugman calls for fundamental reform of the corrupt ratings system.
Tags: Moody's, NRSROs, Ratings agencies, S&P
