Thursday, June 12, 2008
Rating Agency Death Watch
"When [S&P] lowered its ratings on $34 billion of so-called Alt-A mortgages Wednesday, the firm's largest downgrade of that type of debt and one that some strategists see as a harbinger of other rating actions in the sector, it was hardly a blip on investors screens. Jaded by endless downgrades and revisions to the very methodology and assumptions that the firms use the assess risk, most market participants have simply tuned out the rating firms", WSJ, 31 May 2008.
Now that people ignore the rating agencies, next they will ask that securities not be rated. Why waste the money? See my 13 and 19 December 2007 and 4 March 2008 posts. Also my 16 May 2008 post referring to Marilyn Cohen of Forbes.