Standard & Poor’s

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

  • 04 Feb 2013 at 5:10 PM

Controversial New Theory: S&P Got A Few Ratings Wrong

One day – one day soon – the Justice Department will sue S&P for mis-rating a bunch of CDOs, and when that happens let’s all read the complaint and then meet back here to discuss it, okay? [update!] In the meantime we have S&P’s preemptive denial:

A DOJ lawsuit would be entirely without factual or legal merit. It would disregard the central facts that S&P reviewed the same subprime mortgage data as the rest of the market – including U.S. Government officials who in 2007 publicly stated that problems in the subprime market appeared to be contained – and that every CDO that DOJ has cited to us also independently received the same rating from another rating agency.

I submit to you that this is not a great defense, though it has a certain intuitive appeal. If in fact it turns out that S&P knowingly gave terrible CDOs AAA ratings because they were being bribed by investment banks or whatever, then it doesn’t help them much that Moody’s, say, gave the same CDOs the same AAA ratings with pure hearts and empty minds.1 Intent matters; being evil makes you more liable than does being stupid.

More interesting, though, is the claim that “S&P reviewed the same subprime mortgage data as the rest of the market.” First of all, that’s an almost magically ridiculous statement. (Though, also: true!) S&P’s credit ratings not only had the force of quasi-law in 2007 when they were bopping around misrating CDOs: they still have the force of quasi-law today, and there’s no plan to change that. Basel III regulations rely on ratings-agency ratings all over the place. And yet S&P has no actual advantage over anyone else in deciding what’s a good credit risk.

So why would you rely on S&P to tell you what’s a good credit risk? Read more »

  • 11 Aug 2011 at 2:41 PM

Michael Moore Demands Justice


[via WT]

As you may have heard, Standard and Poor’s knocked the US’s debt down to double-A plus from triple-A Friday evening. Several hours before it was made official, the ratings agency was notified their team had made some calculation errors but chose to say “fuck it, on with the downgrade.” This made a whole bunch of people very upset, including Treasury Secretary Tim Geithner, who commented S&P demonstrated “really terrible judgement, handled themselves poorly, showed a stunning lack of knowledge about basic US fiscal budget math, and…came to exactly the wrong conclusion” and Warren Buffett, who shared that he could not give less of a rat’s ass what S&P thinks, that he’s “not changing his mind about Treasurys based on the downgrade,” that “if anything, it may change my opinion on S&P,” and that the United States’s debt is like that of the first buxon milkmaid he laid his eyes on 70 years ago today- her tits may be down on the ground now but they’ll always be triple-A rated in his mind and that’s all that matters.

A slightly different reaction came from PIMCO CEO Bill Gross. He loved the downgrade and if we’re being really honest? It earned S&P some respect in his eyes, ’cause it showed the ratings agency has balls. Read more »

Off by $2 trillion? NBD. Read more »

“It’s a kick in the pants for authorities to now get their act together in terms of a coherent long-term deficit/debt plan,” said Alan Ruskin, global head of Group of 10 foreign- exchange strategy at Deutsche Bank AG in New York. “It’s given a little bit of a lifeline to euro-dollar.” [BusinessWeek]

  • 18 Apr 2011 at 9:36 AM

S&P Not Loving US’s Longterm Debt Outlook

Sayeth the ratings agency:

Standard & Poor’s Ratings Services said today that it affirmed its ‘AAA’ long-term and ‘A-1+’ short-term sovereign credit ratings on the U.S. Standard & Poor’s also said that it revised its outlook on the long-term rating of the U.S. sovereign to negative from stable. Our ratings on the U.S. rest on its high-income, highly diversified, and flexible economy. It is backed by a strong track record of prudent and credible monetary policy, evidenced to us by its ability to support growth while containing inflationary pressures. The ratings also reflect our view of the unique advantages stemming from the dollar’s preeminent place among world currencies.

“Although we believe these strengths currently outweigh what we consider to be the U.S.’s meaningful economic and fiscal risks and large external debtor position, we now believe that they might not fully offset the credit risks over the next two years at the ‘AAA’ level,” said Standard & Poor’s credit analyst Nikola G. Swann. “More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures,” Mr. Swann added.

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