If the Credit Suisse MBS deal is an indication of things to come, the rating agencies may have gone too far to defend their motto of “it could be structured by cows and we would rate it”. While it’s reassuring to see the wheels of the securitization market turning again, the rating agencies should take particular note that the CS did not seek a rating for any of the securities. Given the proven “value” of a AAA MBS rating, Moody’s and S&P may find themselves in the perilous position of discovering that clients are now doing their own analysis and no longer see the benefit of burning money to obtain a meaningless rating. That distinction should be left to TALF participants.
Comments (22)
Leave a comment
You can log in with your account or comment as a guest below.
- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
Alternative Headline:
Greg May Need To Look For Some New Jobs
Investors that don’t do their homework ought to get burned.
Ponderous
gregilicious!
What’s with you and the rating agencies? 50% of your posts seems to be about this.
What if you didn’t go to work one day and while home realized that you had more food at work than in your fridge at home. Man, that’d be quite odd.
i rate you underperform
if you were a stock I’d short you
@7 – I’ve downgraded Greg to “junk” status.
“if you were a stock I’d short you”
your cut is deep
hahahaha
-not greg
most regulated financial entities need public ratings from NRSROs to assign capital. Doesn’t matter whether they do their own analysis or not; they need the rating. Cows will remain employed.
If Greg were a stock, I’d split him. Wait, that sounds sexual. Perfect.
-SAC trader
What’s with you and the sucking? 100% of your posts seem to suck.
-Wildcard bitches!
I love Greg.
-M.Milken
If Greg were a bond, I’d hold him to maturity and receive dividend payments.
-Long only credit hedge fund manager.
@12
what about naked shorting him?
@9
Greg has no junk.
@16
No. He has to wear a latex suit. It’s a safety precaution for when I connect the jumper cables to his nipples.
-SAC trader
Can someone please put the “cows” remark back in context, even if it partially ruins a pretty good soundbite?
The dude said “we’d rate it if it was structured by cows.” That is a true statement. Their job is to rate, no matter what. I could take them a shoe, and pay them to rate it. It wouldn’t rate very high (unless it was patent leather, perhaps), but it would get some sort of rating.
So, he’s right. If a deal sounded crazy, it wasn’t his job to opine on the investment merits, but to tranche out the bonds based on their formulas.
Arguments abound as to what they should have been doing, and whether their formulas accurately reflected reality, but the dude’s correct statement of reality has been, like many things in this crisis, blown way out of proportion.
Greg: I only read your posts because the abuse is so much better than your writing.
ratings agencies – The Biggest Fraud on Wall Street “Investors shouldn’t use our ratings as the basis for an investment decision…” Uh, OK, well then we won’t but of course you won’t be getting paid anymore, morons.
Loans bought at 60 cents on the dollar that went to a private offering didn’t get rated? Time to call my broker and short Moody’s!