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]