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Rating Agencies May Need To Look For Some New Cows

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.