Ratings Agencies: CMBS Schizophrenia

As you’re well aware, the ratings agencies are defendants in a lawsuit.

Now comes this news. Last week, S&P downgraded a slew of commercial mortgage backed securities from AAA – some to junk status.

But that was so last week. Because this week, S&P pulled the ultimate Emily Litella, and said “nevermind”. Just a few days after the downgrade, S&P upgraded those same securities back to AAA.

Now remember, this is not the same thing as a day trader saying he likes the market one day, and then a week later he hates it. This is a rating on the likelihood that a pool of borrowers can pay back their commercial mortgages. How on earth does that go from good to bad back to good in just a few days? Did these borrowers all hit the lottery over the weekend?

Talk about losing credibility!! If it didn’t have such serious consequences, it would be laughable.

Comments

[john s. gordon:]

credibility of S&P reaches a new low.
> jack

Jul 23 08:55 AM

[Roger Knights:]

"Grade inflation" expands its scope?

Jul 23 09:13 AM

[Roger Knights:]

"Grade inflation" expands its scope?

Jul 23 09:13 AM