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Mark Zandi is the chief economist for Moody's Investors Services, Inc. He wrote in support of the government stimulus after Boehner called it a failure.
US market regulator Securities and Exchange Commission (SEC) has dropped charges against credit rating agency Moody's, in a case involving erroneous ratings it gave to some debt securities because of a technical glitch.
SEC was investigating the Moody's Investors Service for violation of anti-fraud provisions of the federal securities laws, and has decided to drop the case because it is uncertain whether it has the authority to judge the case.
Technical glitch?
Someone in Moody's found a glitch in early 2007 regarding the "credit ratings for certain debt obligation notes". The system was fixed within a month. However, Moody's did not publicly correct the rating until 2008.
According to the Report, an MIS analyst discovered in early 2007 that a computer coding error had upwardly impacted by 1.5 to 3.5 notches the model output used to determine MIS credit ratings for certain constant proportion debt obligation notes. Nevertheless, shortly thereafter during a meeting in Europe, an MIS rating committee voted against taking responsive rating action, in part because of concerns that doing so would negatively impact MIS's business reputation.
Those notches give some company with a single A credit rating to a triple AAA rating. (A to A+ to AA to AA+ to AAA). That's fraud - not a computer glitch. Moody's voted against responsive action because it would scar their reputation. And apparently, the SEC isn't requiring any action either.
How can you trust your investment money with this behavior? And the regulations put in place to protect people has been put on the shelf?
Warren Buffet owned 31 million shares of Moody's - and therefore is its largest shareholder. He testified back at the FCIC hearings back in June.
Buffet testified the managers and analysts at Moody's "made a mistake that 300 million other Americans made," by not seeing the housing bust coming.
"The credit ratings has come under heavy fire from lawmakers and regulators for assigning top credit grades to mortgage-backed bonds that later turned out to be lemons," according to DSNews.com
But in his testimony, Buffet said, "I'm much more inclined to come down hard on the CEOs of institutions" that originated the risky loans and then accepted big government bailouts.
So Buffet deflects the blame away from Moody's and on to the CEO's of other financial institutions - many of which depend on Moody's credit ratings in their investing strategies.
At the end of this article...
Buffet and Raymond McDaniel, Moody's CEO, were seated side-by-side at the hearing when McDaniel told the commission the housing collapse and the economic turmoil that followed was on a scale that "many of us would have once thought unimaginable."
"The regret is genuine and deep with respect to our ratings in the housing sector," McDaniel testified, according to DSNews.com. McDaniel has run Moody's since 2005.
"To be blunt, the picture is not pretty," Angelides told McDaniel and Buffet. He added, "Moody's did very well (during the financial meltdown). (However), the investors who relied on Moody's ratings did not do so well."
Angelides described Moody's ratings service as a "triple-A factory." He said the agency assigned a top grade of AAA to 42,625 residential mortgage-backed securities (RMBS) between 2000 to 2007.
"In 2006 alone, Moody's gave 9,029 mortgage-backed securities a triple-A rating," Angelides said.
"To put that in perspective, Moody's currently bestows its triple-A rating on just four American corporations."
Here is the Wall Street collapse - or at least a big part of it in a nutshell. Faulty ratings on subrime mortgages from Moody's triggered bad investments that should have never happened. And the SEC just let them off the hook.
Corruption, collusion and greed. They are ALL in on it and doing it and no one, NOT A SINGLE ONE is brave enough to take any of them to task.
Hearings, grandstanding to the press about how they will be grilled.
Then later, not to much press, a slap, maybe a fine and then a "don't do it again".
The government and all its agencies are corrupt to the core and there's no one to fix it, no one.
It won't get fixed until it all comes crumbling down around us.
I respect Warren Buffet, but I disagree with him on this issue. The ratings agencies (not just Moody's) were rating securities so complicated that they did not fully understand what they were rating. They went ahead and gave high ratings because the securities of their customers were the ones they were rating, and they did not want to lose business because of a bad rating.
They got away with it for a time until... they didn't.
The ratings agencies are just as culpable as any on Wall Street for the near collapse of the world's economy.
I respect Warren Buffet, but I disagree with him on this issue. The ratings agencies (not just Moody's) were rating securities so complicated that they did not fully understand what they were rating. They went ahead and gave high ratings because the securities of their customers were the ones they were rating, and they did not want to lose business because of a bad rating.
They got away with it for a time until... they didn't.
The ratings agencies are just as culpable as any on Wall Street for the near collapse of the world's economy.
So when in doubt give them a AAA rating..the best of the best ?
If anything..DON'T RATE IT if you can't define the risk associated with it.
Yes, it IS that simple..don't rate it.
How can any investor trust the ratings of bonds anymore ?
I respect Warren Buffet, but I disagree with him on this issue. The ratings agencies (not just Moody's) were rating securities so complicated that they did not fully understand what they were rating. They went ahead and gave high ratings because the securities of their customers were the ones they were rating, and they did not want to lose business because of a bad rating.
They got away with it for a time until... they didn't.
The ratings agencies are just as culpable as any on Wall Street for the near collapse of the world's economy.
Their evaluations are indeed dubious. They just downgraded Portugal to trash although there was no reason for that whatsoever. Actually, the new government is ahead of the official schedule agreed on with the IMF etc. and the measures taken go beyond the expectations of the international finance mafia. Still, out of the blue comes that trash verdict and people are wondering what the hidden agenda is...
Their evaluations are indeed dubious. They just downgraded Portugal to trash although there was no reason for that whatsoever. Actually, the new government is ahead of the official schedule agreed on with the IMF etc. and the measures taken go beyond the expectations of the international finance mafia. Still, out of the blue comes that trash verdict and people are wondering what the hidden agenda is...
Debt to GDP is approaching 100% and the Portugese are not like the Japanese. Their is simply not enough demand for their services.
Debt to GDP is approaching 100% and the Portugese are not like the Japanese. Their is simply not enough demand for their services.
But the upwards trend is gradual, it has been that way for a long time. There was no current event or anything. If anything the outlook is improving, at least from the perspective of the finance mafia.
But the upwards trend is gradual, it has been that way for a long time. There was no current event or anything. If anything the outlook is improving, at least from the perspective of the finance mafia.
It also has to do with the population taking to austerity. I would imagine that like Greece, Portugal doesn't like the idea of entitlements cut off, much less so than a more industrious country like Germany.
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