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EternalHoH -> RE: S&P's President ... Gone ... (8/23/2011 10:25:37 AM)
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quote:
ORIGINAL: FirmhandKY
Ok. But why are they a joke?
Firm
Because they are only peddling "opinions", which is how the ratings agencies defended themselves for being wrong in congressional hearings, those first amendment lawyers they hired were quick to point out that "opinions" are all they give. And the financial crisis of 2008 showed that their "opinions" had been for sale to the highest bidder for quite some time, thus all the AAA ratings on all those companies who were peddling mortgage junk, in addition to AAA ratings on the junk itself.
Their "opinions" have become irrelevant in the context of lawmaking in this country. Hence the provision in Dodd-Frank to replace them with alternate regulations, which as a lawmaking body, congress has the ultimate provision to do, at least so when it comes to Uncle Sam's finances. Only lowly suckers out there like you paying loan shark interest rates on credit cards and loans will still be subjected to the whims of blatantly corrupt ratings agencies "opinions". In essense, this private sector machine got so corrupt and so bad at its job, the government is throwing them overboard when it comes to assessing its own finances. There will never be another downgrade on govt debt like we saw. The mechanism will be replaced by other regs before that happens.
http://www.bankinvestmentconsultant.com/news/banks-regulation-debt-rating-downgrade-2674577-1.html
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"It will reinforce the view of those in Congress who believe that Dodd-Frank made the right decision," said Wayne Abernathy, executive vice president of financial institutions policy at the American Bankers Association and a former Treasury official in the Bush administration. "What they will say is, 'We put this provision in Dodd-Frank because these are largely as educated opinions as you want to grant them, but they're educated opinions, and they shouldn't be carrying with them the force of law.'"
Also, think of it this way, how does the government fire up the anti-trust chainsaw and go after "too big to fail", to avoid having your taxpaying ass having to bail out the gambling elites among us once again, when the same industry has power over the credit ratings of the government. You have to free the government's finances from these corrupt "opinions" first.
The entire downgrading exercise was a joke, run by the Madoffs of the credit industry. It amazes me how people on one side of the political aisle all of a sudden act as if these same ratings agencies who were so wrong and so corrupt from 2000 to 2008 all of a sudden believe these same companies that are still run by the same execs are suddenly 'golden' in their analysis, are beyond critical reproach, and are such great truth-tellers simply because of who they are critical of this time around.
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