Scrutinizer

Moody's Makes a Bad Situation Worse

Tom.. you're right on the money with your comments on the arbitrary (and inane) analytical models being used by the Rating Agencies.

For them to make irresponsible statements like these is tantamount to yelling fire in a crowded theater....

.....A theater crowded with people who paid extortionary ticket prices (mortgages) who were reassured by these "fire marshal" that there was plenty of room and no one was in any danger.

And although the spark that set that tinder box on fire was set by FASB 157, the flames were fanned by the blustering shouts of "Fire!!" from these rating agencies.

And in the middle of this are the monolines, who set their premiums according to these fraudulent credit ratings, provided by Moody's and S&P. As a monoline insurer, you don't argue with the credit agencies with regard to ratings, even if you think the risks are greater than the models they are assigning.

Had these instruments been properly rated in the first place, the higher premiums the monolines would have charged would have served as the canary in the coal mine, as well as providing that additional capital that so many people seem to believe is so necessary to increasing reserves.

Tom.. Get yourself an agent and get on Bloomberg, FoxBusiness.. CNN, CNBS... anything. Get out there and tell this story my friend!!!

Hell.. meet me at the SEC building in DC and we can both protest that the SEC take action against the "priesthood" at Moodys/S&P. And at the same time we can call for them to suspend FASB 157.

Take care!!

Scrutinizer