From the “truth is stranger than fiction” department: When I first saw the headline Friday that MBIA (MBI) had asked Fitch to remove its ratings, I thought, “Nah, can’t be. Certainly not after all of the fuss on rating agency independence.”
But that’s just what happened: MBIA asked Fitch, which has been the most negative of all ratings agencies, to stop rating six of its companies and subsidiaries. It will, however, continue to welcome its ratings on certain outstanding debt on the parent company, MBIA, and MBIA Insurance Corp.
Seems, according to press reports, MBIA didn’t like Fitch’s model, which would’ve required the company to put up more cash. An MBIA spokesman also said something about Fitch’s fees being too high.
Whatever the reason, I wanted to pass on this memo to MBIA: When the world is clamoring that debt rating agencies, which you pay, aren’t independent enough, the last thing you do is fire the one that appeared the be the most independent.