Saturday, August 6, 2011

How Do You Like Them Apples?

Congress, April 2011;
"Moody's Corp and Standard and Poor's triggered the worst financial crisis in decades when they were forced to downgrade the inflated ratings they slapped on complex mortgage-backed securities, a U.S. congressional report concluded on Wednesday.
``The problem, however, was that neither company had a financial incentive to assign tougher credit ratings to the very securities that for a short while increased their revenues, boosted their stock prices, and expanded their executive compensation,'' the report said."
Well, I guess we can consider this particular problem solved! Yessir, Standard and Poors have learned their lesson about the perils of letting risky, systematically important debt stay classified as riskless long after that has stopped being an appropriate description.

Congress must no doubt be thrilled.

Meanwhile, S&P are probably drinking a tasty glass of schadenfreude right about now, and cheerfully giving the US government this one:

Oh, so now you DO want us to be charitable in our ratings, huh?

(inspired by an observation of Coyote's)

No comments:

Post a Comment