Rating agencies

  • jimmycayne (2)


    Fitch, Moody’s, S&P Were Quite Obviously Pulling A Jimmy Cayne For Most Of The Years Leading Up To The Financial Crisis, Allege Bear Stearns Hedge Fund Liquidators

    The liquidators want $1 billion for investors and the name of the rating agencies’ dealer for a friend.

    / Nov 11, 2013 at 4:47 PM
  • umm, what?


    Some S&P Analysts Weren’t Happy With S&P’s Whole “Trying To Rate Deals” Thing

    Michael Lewis had this to say yesterday about Greg Smith’s criticisms of Goldman Sachs:1 None of this exactly came as news. The news was that a living, breathing Goldman employee had said it. There was also, between the lines, a fresh hope: Goldman had employed an idealist! For a decade! That was pretty much my […]

    / Feb 5, 2013 at 12:54 PM
  • cows, possibly European


    EFSF Conveniently Downgraded

    Here are two tiny little puzzles about Moody’s’s’s downgrade of the European Financial Stability Facility from Aaa to Aa1 just now. But first, here is some math on EFSF guarantees; basically every €100 of EFSF bonds has €165 of member guarantees, of which €103ish were Aaa-rated and €62ish were not. Until Moody’s downgraded France last […]

    / Nov 30, 2012 at 6:17 PM
  • It's ... a cow.


    S&P Doesn’t Want Banks To Be Too Safe

    What is this S&P paper on how the Volcker Rule could force S&P to lower ratings on banks? One basic intuition you could have is that the earnings you get from prop trading are not particularly stable so shouldn’t count for much in your credit ratings; on this intuition things like highly levered hedge funds […]

    / Oct 22, 2012 at 7:36 PM
  • This is a graph of "Bank Total Risk" as measured by "6-Months Rolling Risk Measures." You could have questions about these measures, which are a combination of (1) stock market measures (basically the vol of a bank's stock) and (2) balance sheet measures like Z-scores. So you could ask yourself "does this reflect the bank's risk-taking, or the market's perception of the bank's risk, and are those meaningfully different things to measure?" ANYWAY. Up is riskier.


    Don’t Rely On Rating Agencies To Tell You Who Will Get A Bailout

    A thing I sometimes enjoy is reading research papers examining questions like: if you are a bank, and you are likely to be bailed out, do you take more risks than a bank all on its lonesome, and once you’ve been bailed out, what then? We’ve looked at a BIS paper on international banks, which […]

    / Aug 21, 2012 at 12:09 PM
  • Why hello there cow.

    Banks, News

    Moody’s Slightly Reduces Overrating Of Banks

    Are we supposed to care about these downgrades? I like Glenn Schorr at Nomura, emphasis mine: We think the net financial impact of these downgrades will be manageable as 1) potential collateral calls are small percentages of these firms’ liquidity pools; 2) counterparties have been preparing for this for some time and ratings downgrades have […]

    / Jun 22, 2012 at 10:03 AM
  • News

    Moody’s: Banks Do Things That Are Bad And Good And Bad For Them

    Moody’s Investors Service downgraded the debt ratings of 15 major international banks and securities firms on Thursday, a move that could cost the banks billions of dollars in extra collateral…U.S banks that were downgraded included: Bank of America, Citigroup, Goldman Sachs, JPMorgan, and Morgan Stanley. “All of the banks affected by today’s actions have significant […]

    / Jun 21, 2012 at 5:54 PM
  • News

    European Banks Want To Make Rating Agencies Stupider

    It’s sort of easy these days to worry about banks. Banks do worrying things, etc. Bankers are only human and sometimes they get things wrong. Arguably those errors are systematically biased in favor of risk, what with the bankers being incentivized by asymmetric incentives and so forth. One thing that could help you sleep at […]

    / May 16, 2012 at 5:53 PM
  • Banks

    Spare Some Worrying For Ratings-Triggered Collateral

    Remember how a week ago people went around bothering themselves about Bank of America’s derivatives? Specifically how if they get downgraded, as seems plausible, they will have to come up with a zillion more dollars for derivative collateral? And how earlier this week they did the same for Morgan Stanley? Anyway we talked about it […]

    / May 11, 2012 at 6:22 PM
  • News

    Former S&P Analyst Has Some Things He’d Like To Get Off His Chest

    Yesterday we talked a bit about this lawsuit bubbling around where some investors are suing Moody’s and S&P for doing a not so great job rating some asset-backed SIVs called Cheyne and Rhinebridge. I said then that the rating agencies were probably pretty keen to avoid going to trial for negligence, because, well Because … […]

    / May 9, 2012 at 5:15 PM
  • News

    Ratings Agencies Can Be Sued As Long As They Lie To Few Enough People

    One thing that looks pretty certain is that lawsuits over crisis-era structured credit products will be around for the rest of our natural lives, burbling around in courts and every now and again surfacing in a Reuters article with a bunch of nine-digit numbers and acronyms of defunct German banks. This is comforting, in a […]

    / May 8, 2012 at 5:30 PM
  • News

    Quis Custodiet Ipsos Egan-Joneses?

    Let’s not stop there with the clichés.* Here’s a great one: “never attribute to malice that which can be adequately explained by stupidity.” In applied form: your model of all the AAA mortgage CDOs that were maybe not so AAA could be “ratings agencies were paid by banks so they were venal and corrupt and sold the banks good ratings on products they knew were bad.” Or it could be “ratings agencies created medium-dumb criteria to make a thing be AAA, and bankers who were smarter than medium-dumb arbed those criteria to make more things be AAA than should have been AAA.” The incentives model has good economic theory behind it, and some suggestive evidence; the stupidity model has that lovely cliché but also some evidence, about which more later.

    But first hilarious contrarian ratings agency Egan-Jones is in trouble:

    / Apr 19, 2012 at 3:53 PM
  • News

    Fitch: You Should Just Give Up Already

    Fitch Ratings lowered its outlook on France’s triple-A rating to “negative” from “stable,” indicating there is a 50-50 chance the nation could lose its top investment-grade rating over the next two years. The move came as Fitch also placed its ratings on six other euro-zone nations, including Spain and Italy, on watch for downgrade after […]

    / Dec 16, 2011 at 2:04 PM
  • News

    Fitch: If The US Doesn’t Shape Up…Something Of Little To Consequence Might Happen

    Fitch’s outlook on the U.S., which it still assigns its top AAA grade, reflects declining confidence that timely fiscal measures necessary to place U.S. public finances on a sustainable path will be forthcoming, the company said in a statement today. Standard & Poor’s and Moody’s Investors Service said Nov. 21 that the so-called supercommittee’s inability […]

    / Nov 28, 2011 at 5:47 PM
  • Rating Agencies

    Don’t Ask To Speak With Brian Moynihan Today

    He may be in a mood.

    / Sep 21, 2011 at 12:39 PM
  • News

    Credit Ratings Agencies May Want to Tread Carefully

    It turns out that when you say things like “let’s not pay back our debts, what’s the worst thing that can happen?,” one thing that does happen is that the credit ratings agencies start worrying that you might not pay back your debts. Weird. From Reuters: Standard & Poor’s has warned lawmakers privately that it […]

    / Jul 14, 2011 at 1:49 PM
  • News

    Rating Agencies Emerge Victorious From Regulatory Overhaul

    While there are many sectors of the financial services industry that likely feel they were on the losing end of yesterday’s 80+ page regulatory reform proposal, there was one true winner- the rating agencies. In fact, the proposal has arguably strengthened their position. The proposal does not address the misalignment of interests between the agencies […]

    / Jun 18, 2009 at 10:12 AM
  • News

    Dudley Says TALF Assets Totally Safe Because They’re AAA

    We’re not sure if New York Fed President Bill Dudley was trying to be sarcastic or just completely out of his mind when he tried to reassure participants at a SIFMA summit that the Fed’s risk of loss from the TALF program was remote due, in part, to the fact TALF assets are required to […]

    / Jun 4, 2009 at 1:13 PM

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