Oracle Cuts Back As Ratings Agencies Cut Back

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Warren Buffett's a pretty moral guy, we think. He's old, yes, and thinks that railroads are the future as we enter the year 1910. But he isn't a cheating bastard.
He just invests in them: to wit, his 13% stake in the lying, thieving Moody's Corp., parent of the august Moody's Investor Services, one of the three ratings agencies that allowed Wall Street to wrap fresh feces in a couple of mortgages unlikely to default and sell them as gold. But maybe the O is having second thoughts.

Billionaire Warren Buffett's company is continuing to reduce its stake in credit ratings firm Moody's Corp., but Berkshire Hathaway Inc. still controls about 13 percent of Moody's stock....
Over the past nine months, Berkshire has significantly reduced its Moody's holdings. Berkshire held 48 million shares in March and reduced that stake to 31.8 million as of last week.


On the other hand, maybe the ratings agencies have changed their ways. Maybe they're actually looking at the bonds they're supposed to be evaluating, rather than flipping a coin that says "AAA" on one side and "AA+" on the other.
"Investors in AAA debt are running out of options," Breakingviews' Agnes Crane solemnly warns.

Yet another top-rated class of debt is on the hit list now that Standard & Poor's may downgrade covered bonds--a type of mortgage-backed security popular in Europe. Soon there will be little AAA debt left outside the world of government and quasi-government debt. That is putting safety-oriented investors in a bind.

You know what else puts safety-oriented investors in a bind? Losing their shirts on a pile of crap Moody's, S&P and their ilk said was top-notch. The problem here has less to do with a shortage of highly-rated investment-grade debt. It has to do with our being used to there being too much.
Buffett's company continues cutting Moody's stake [AP via Google]
Triple trouble [Breakingviews]

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