Rolf Englund IntCom internetional
Ratings agencies and the Subprimes
In a statement to the FT, Moody’s said:
Credit rating agencies need radical reform if they are to do their
/The rating agency/ Fitch disclosed as recently as March 2007 that
This mass belief in a faulty housing premise in spite of evidence to the contrary in Japan is what helped form the US housing top. Greater fools everywhere who came to believe that faulty theory eventually rushed in to speculate in housing. That made the top. Even the rating agencies got into the act.
Please consider Fitch Discloses Its Fatally Flawed Rating Model. As amazing as it might seem now, /The rating agency/ Fitch disclosed as recently as March 2007 that their model for rating CDOs assumed low to single digit home price appreciation forever into the future.
They even admitted their model would break down if home prices were flat for an extended period of time.
es, there are a handful of us that see deflation coming, but as Nimesh writes "For almost thirty years people like you have predicted that our economy will collapse and it hasn't happened."
Mocking of the early visionaries is part of the topping process. Group think sets in and is reinforced over the years. Risk premiums drop as the long term trend reaches the peak. That takes time. Memories fade. Does anyone fear another great depression? Heck, does anyone even remember it, let alone fear it?
Why The Credit Bubble Lasted For Decades
Ambac, the world’s second-biggest bond insurer, on Friday lost its crucial triple-A credit rating,
The real problem is the "monoline insurers" like ACA, Ambac, and MBIA.
Credit rating agencies must rapidly demonstrate that they are reforming their activities or face a clampdown, Michel Prada, the senior French regulator warned.
In their fifth evidence session inquiring into financial stability following the Northern Rock crisis, the Treasury committee grilled representatives of the three largest credit rating agencies: Fitch, Moody's and Standard & Poor's. Corporate credit rating agencies are companies that assess the creditworthiness of bonds and bond issuers, in return for a fee. And they gave many securitised assets containing subprime mortgages triple-A ratings.
Regulators to probe ratings agencies