Maybe the guys at Moody’s are finally getting it. Apparently somewhat lost on the Moody’s clan during the past 6 or so years when getting a rating was about as tough as waking up, was the clear arb at the top of the capital structure. Between the two masters of mean reversion analysis, Moody’s had more stringent conditions than S&P to achieve a AAA rating for ABS securities. When there was plenty of appetite for sub-AAAs, Moody’s didn’t seem to care one bit about the arb. It has taken the government’s requirement of only one AAA rating for TALF eligibility to snap Moody’s out of this haze and now, naturally, they are complaining about it.
The need to have a AAA rating to be eligible “for government programs raises the specter of rating shopping,” Andrew Kimball, head of the global structured finance business at Moody’s Investors Service, said during the company’s investor day today. “Those programs don’t differentiate on the quality of the rating. Rating shopping becomes a problem.”
The irony in his statement is delicious. No doubt Ben Bernanke will soon be listening to the debate on why its unfair to treat two completely worthless ratings differently.
Fed’s TALF Fuels Rating ‘Shopping,’ Moody’s Says [Bloomberg]
whats tanking the euro$ mkt?
Greg I feel sorry for you. Your last post on DB is about a rating agency. Tough way to leave.
Nice last sentence.
This is old news. Ratings shopping has been going on for a decade. The whole RMBS, ABS and CMBS industry is a joke! For deals with Government backstop, all the government needs to do is to require, say, four rating agencies on the deal and the “true” credit quality will be revealed. Only banks will object to this since they risk not being able to dictate the ratings. Loosers!
Hilarious ! Good work, Greg. It’s funny to see the Moody’s “M” logo behind bars, too.
O/T: Zero Hedge on Fox Business News:
http://zerohedge.blogspot.com/2009/06/zero-hedge-on-fox-business.html
@1 positions mostly – Euribors started yesterday – sentiment shift to “exit strategy” along with significant curve unwinds causing the bear flattening pain today
@7- you know the only reason they mentioned the ZH post in question was b/c it was republican pandering crap from marla ie ep, right? cool.
AF jet crash. Brazil morons.. complete crap, bullshit on reporting. This is why we hate South America. They will say ANYTHING. Completely full of shit. Financial illegality just comes from total lack of moral compass. Stay the fuck away from US.
Hey Greg, would you fuck me? Because I would fuck me.
Buffalo Bill
@8
You are exactly right. EP (aka Marla) is working overtime using statistics trying to prove a GOP conspiracy theory. Fox gives it airtime because it’s part of their agenda. Rumor is EP just blew a fuse trying to memorize the logarithmic tables for this little project.
As noted by Novice, the last sentence salvages this post to a grade of “barely passable” which I’ll readily concede to be an indication of progress, however small, on the part of Greg.
@11- yup.
Gregorio,
You should have noted that ratings shopping has been the name of the game always, TALF or no TALF.
Good post Greg. Concise, with a bit of bite.
-Not Greg
@15 – Is your name, Anus?
AF jet crash. Brazil morons.. complete crap, bullshit on reporting. This is why we hate South America. They will say ANYTHING. Completely full of shit. Financial illegality just comes from total lack of moral compass. Stay the fuck away from US.
RED ALERT – We have a yahoo at 17
But I thought all the junior bankers and the associates loved the rating shopping game, directing their business to where the weakest deals would get the highest ratings, which would allow them to maximize their bonuses while sniffing sarcastic at the boob rating company analysts while enjoying a nice single malt and a cigar.
Ah, the good old days, when the bankers would tell the ratings analysts they don’t get it, or are dumb, because the other factory would give it a AAA.
Now the bankers are very, very angry with the ratings factories. Beautiful.
Pfluger
Banks are a racket.
HFs are a racket.
Rating agencies are a racket.
The only financial employees with good consciences are the admin assistants.
@ 20 — were you pounding your admin ass’t as you typed that?
TALF requires two AAA ratings, not one.
Either way, rating shopping has always been a problem – and I doubt it will go away any time soon.
@7, it seriously took a dive. who out there moved so many positions? it’s like 50 points down. Euribors inched downward compared to the dive euro$ took.
this is the way the world ends, not with a bang but with a whimper.