Credit Rating Agencies' Track Record Speaks for Itself

Best news I heard Wednesday: Regulators May Limit S&P, Moody’s Structured Business. And I’ll vote for that and more: boot them out of that business altogether. The credit rating agencies have no business rating structured finance, new scale or not. Their track record speaks for itself, fully responsible for $146 billion in losses.

Experts agree:

At the American Securitization Forum’s conference in Las Vegas, Michael A. Macchiaroli, an associate director at the SEC, said ratings companies were among the “key players” that created the debt-market turmoil.

Related:
Rating Agencies May Face Restrictions in Structured Finance at Naked Capitalism
Moodys Warning Labels (sub-prime version)
Barry Ritholtz:

WARNING: THESE BONDS HAVE BEEN RATED AAA BY A MAJOR RATING FIRM. THESE RATING FIRMS HAVE PROVEN THEMSELVES TO BE CLUELESS, MONEY-LOSING INCOMPETENTS IN EXCESS OF A TRILLION DOLLARS IN LOSSES. THEY WERE PAID HANDSOMELY BY THE BOND UNDERWRITER, AND ARE HOPELESSLY COMPROMISED. PURCHASERS OF THESE BONDS ARE ADVISED TO IMMEDIATELY KILL THEMSELVES, THUS SPARING THEIR LOVED ONES EMBARRASSMENT IN THE FUTURE. ALSO, THESE BONDS MAY LOSE VALUE. I JUST WET MYSELF MERELY THINKING ABOUT THIS PAPER. WHILE PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RETURNS, YOU SHOULD BE AWARE THAT PAST PERFORMANCE ALSO SUCKED. DONT BLAME US IF YOU LOSE ANY MONEY, AS WE HAVE NO IDEA WHAT THE F$#@ WE ARE DOING ANYWAY. REALLY, YOU ARE ON YOUR OWN.

Yep, that’s a disclosure . . .