Moody's Ratings Agency: 'When Junk Was Gold'
Latest Report
New fears for Spain as ... debt is downgraded
MelKelly
11 March 2011 7:04AM
We have been immersed in a financial crisis across the entire continent of Europe. Most of the European Media and many European politicians have spent two
years trying to brainwash a continent’s people into believing austerity cuts must happen. But how did we get here? ...
On the 31st of August 2010, the American Securities and Exchange Commission issued one of the first reports on the causes of the financial crisis, a report
stating the credit rating agency Moody’s committed fraud againt Europe's financial sector.
Moody's held a meeting in Europe, in 1997, where they acknowledged their organisation had vastly overrated bad debt and sold it on as good debt to European
financial institutions.
Moody’s decided at this 1997 meeting they would not tell anyone of this massive overrating of this debt and would not correct their error as this would ruin
the company’s reputation. [sec-gov]
The worldwide credit rating agencies, – Standard & Poor's, Moody's and Fitch are already being sued in America for being paid billions to bundle up bad debt
and then sell it on as AAA debt.
The lawsuit states the agencies were negligent when they gave gold-plated ratings to mortgage derivatives that have since turned toxic.
The rating agencies were indispensable players in the structuring and issuance of SIV debt, which they subsequently rated for huge fees paid by the issuers – 'rating their own work', according to a recent Securities and Exchange Commission report." "The credit ratings on SIVs ultimately proved to be wildly overinflated. The agencies "gave their highest credit ratings, and by doing so made negligent misrepresentation "The credit ratings on SIVs ultimately proved to be wildly inaccurate and unreasonably high."
They knowingly sold Europe bad debt and Moody's continue to reduce credit ratings on European countries - unless they clear the bad debt that Moody's sold to them!
Moody’s are also dictating to European governments if they don’t make austerity cuts to clear the bad debt they knowingly sold us, they will junk our credit
rating.
Britain should not be held to ransom by Moody’s, Fitch and Standard & Poors who are responsible for the biggest financial fraud in history ...
It beggars belief that this government has kept us in the dark and hopes to sweep this under the carpet.
Why would the coalition government be keeping quiet about this damning report when it has been proven this was financial fraud, on the grandest scale ever seen.
Why have this said nothing to the people or the media.
What have they to gain by hiding the fact an international credit rating agency knowingly sold bad debt to Europe and has kept quiet about it.
Their gain can be summed up in one word. REFORM.
Guardian 10 Mar 2011
Banking rules may encourage riskier trading, warns ratings agency
The 29 biggest banks in the world could be encouraged to embark on riskier trading activities as they race to raise $566bn (£358bn) of capital to meet new rules intended to make them more resilient, according to an analysis by the Fitch ratings agency.
The 29 banks are deemed to be global systemically important financial institutions – G-Sifis – and include the UK banks Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland as well as Santander in Spain, Deutsche Bank of Germany and a range of US banks ...
The need for extra capital will reduce the return on equity – a critical measure of performance for shareholders – and in an effort to entice investors the banks may be encouraged to take bigger risks ...
Gdn 17 May 2012Moody's downgrades Spanish banks
Standard & Poor's reaffirms UK's AAA credit rating
The real policy makers have spoken; rebalancing the economy is clearly not on their agenda.
S&P said in a statement: "In our view, the UK has a wealthy, open, and diversified economy, supported by a well-established political system and macroeconomic policy framework, which can react quickly to economic challenges.
"We expect economic policy to focus on closing the fiscal gap, and we forecast the government's net debt burden to peak in 2013 [at about 87% of GDP]." ...
BBC NEWS 13 Apr 2012Downgrade the ratings agencies
Do credit rating agencies threaten our financial stability?
When ratings agencies judge the world
Complicity In Crisis: Can We Trust Ratings Agencies?
A French credit downgrade would be bad news for Europe too
As much as France wants to keep its AAA debt rating – for the kudos and because it keeps the country's borrowing costs down – so Europe's new bailout fund needs one of the most important countries in the eurozone to retain its top-notch rating ...
... the difference – or spread – between 30-year French and German government bonds ... at more than 120 basis points ... is wider than it has been for many years.
This means that it could cost France over one percentage point more than Germany to raise money on the markets ...
Gdn 24 Oct 2011 Bankocracy EU Log Ratings Agencies
Saving the euro with fiat moneyEurozone lurches closer to recession
Italy's sovereign debt rating cut by S&P on growth fear
S & P - typically - want it both ways: cuts in spending and 'stimulus' to growth.
Standard and Poor's cut its rating by one level to A from A+.
The agency cited Italy's weak growth, criticised Rome's response to the debt crisis so far and said political uncertainty could hamper it in future ...BBC NEWS 20 Sept 2011 Contesting the Markets EU LogAnalysis
At first I thought David Willey was writing about Britain ...
People I have been talking to are unanimous - the country desperately needs some strong measures. And in the opinion of Standard & Poor's, it isn't getting them.
It is going to be a rather bleak autumn and winter: cuts in social services, cuts in transport and rising prices, including a one percentage point rise in VAT last week.
There is an atmosphere of widespread dismay that the government's so-called austerity programme doesn't seem likely to bite.
Nor does it deal with two factors which colour the Italian economic situation: namely, the government's inability to deal decisively with widespread tax evasion at all levels, and the general lack of stimulus that it gives to the economy.
This is a country that has been stagnating under the leadership of Prime Minister Berlusconi for years now and doesn't show any signs of improvement.
China blasts US 'debt addiction'
"China, the largest creditor of the world's sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets," (the official Xinhua news agency) said.
China also urged the United States to apply "common sense" to "cure its addiction to debts" by cutting military and social welfare expenditure.
"The US government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone," Xinhua wrote ...
"International supervision over the issue of US dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country," Xinhua said ...
Chinese economists said the U.S. credit rating downgrade posed a great risk to financial markets and they expected it to prompt China, the world's biggest holder of U.S. Treasuries, to accelerate the diversification of its holdings ...
"China will be forced to consider other investments for its reserves. US Treasuries aren't as safe anymore.
"There is a class of assets out there that are more risky than AAA, but less risky than AA+.
"China didn't consider these investments before, but now it would be forced to do so," Li Jie (a director at the Reserves Research Institute at the Central University of Finance and Economics) said ...
Tel 06 Aug 2011 America China
Is capitalism ... ? What caused the credit crunch?No Better in Europe
Political Roots in U.S. Economic Crisis
US is stripped of its AAA credit rating
Reactions
US stripped of AAA credit rating
"Be Nice to the Countries That Lend You Money"
Crisis of the U.S. Dollar System
European debt crisis
Italy forced to pay higher rates to borrow
Weak UK growth puts AAA rating at risk
Downgrade threat leaves shrinking pool of investors
A reduction in the credit rating of heavily indebted countries such as Spain and Italy would substantially curb their ability to borrow much-needed cash – perpetuating a vicious downward spiral in which they are unable to raise all the funds they need to invest their way to growth while paying through the nose for the little they can secure.
As the threat of further downgrades to Spanish and Italian sovereign debt looms larger in the wake of last week's bailout of Greece, the pool of investors willing to lend to them by buying government bonds will become ever smaller.
Already institutions such as pension funds are barred from buying bonds from governments such as Spain and Italy because they are only allowed to buy the safest triple-A rated debt ...
Ind 26 July 2011 Bankocracy Log EU Log Ratings Agencies
Alternatives to Borrowing
Everything changes in global financial markets if there's a credit-rating cut
What can we say for sure? Two things.
The micro consequences of a downgrade are uncertain. And nothing causes financial markets to panic like the sudden removal of certainty.
Will Standard & Poor's, or its rivals Moody's and Fitch, really pull the rug from underneath global finance?
In the eurozone, they have certainly shown themselves to be unimpressed by bailout fudges and immune to political pressure.
Now, partly in competition with each other, so as to be seen as the firm that got out ahead of events, these Great Powers are positioning themselves in ways that makes a US downgrade seem more likely than not ...
Ind 16 July 2011 America Bankocracy Log
Cutting the Deficit with the Laffer Curve The Big Danger In Cutting The DeficitUS debt talks deadlock edges ratings agencies toward downgrade
'The US Is Holding the Whole World Hostage'
Behind Battle Over Debt, a War Over Government
Getting to Crazy
What’s the best way to reduce the deficit?
US debt standoff threatens to turn crisis into catastrophe
• Republicans insist on spending cuts without raising taxes
• Obama sets 22 July deadline for action
• JP Morgan chief warns of severe damage to global economy if US defaults
At the heart of the political wrangling is a determination by each side to blame the other for a stagnant economy, with unemployment remaining stubbornly high at above 9% ...
Gdn 14 July 2011 America Bankocracy Log
The Big Danger In Cutting The DeficitUS debt talks deadlock edges ratings agencies toward downgrade
'The US Is Holding the Whole World Hostage'
Behind Battle Over Debt, a War Over Government
Getting to Crazy
Europe, Free Speech, and the sinister repression of the Rating Agencies
To compare the ratios of national debt to GDP levels in the Anglosphere with those in Europe, as the EU elites tirelessly do, is to the miss the point.
My gripe against the agencies is not that they are downgrading all these semi-bankrupt states today, but that they totally failed to signal the inherent dangers of EMU a long time ago when the crucial investment decisions were being made.
They too were swept up by euro euphoria. They too failed to understand the inherent structure of monetary union, or to spot obvious warning signs as the drama unfolded and the North-South divide became ever-more apparent.
They handed out AAAs like confetti.
That is the great indictment of Fitch, S&P, and Moody’s in this sovereign saga, especially Moody’s (which has since replaced much of its French-led sovereign team). Moody’s still had a A3 rating on Greece in May 2010. Unbelievable ...
What should have been done is obvious.
The EU’s bail-out fund should have been given powers mop up the bonds of countries in distress on the open market at a hefty discount (as the ECB suggested).
Investors would have suffered condign losses, and the EU could have given Greece debt relief by retiring bonds with no net loss to European taxpayers.
This elegant solution was blocked by Germany because it was seen as a slippery slope towards a Transfer Union, and might have violated the Grundgesetz.
(In a sense the Germans are right, but you shouldn’t join a currency union in the first place if don’t realize that it implies fiscal union.) ...
Tel 07 July 2011 Bankocracy Log EU Corporate State
Eurozone split over new Greece bailout
[Dutch finance minister Jan Kees] de Jager said the French plan lets the banks off too lightly, and unless finance ministers impose bigger losses on them, Europe would be "converting private debt into public debt" by lending Greece more money from European taxpayers to pay back bondholders.
Sony Kapoor, of the Brussels-based thinktank Re-Define, said the current plan would have all the disadvantages of a default without actually reducing Greece's debt.
"The appearance of private-sector involvement is far more important to EU leaders than the actual fact of it," he said.
"We are in the worst of all worlds. The EU and Greece have paid most of the costs that would result from any restructuring of debt without realising any of the upside in the form of a reduction of risks to EU taxpayers or a restoration of debt sustainability in Greece." ...
Gdn 06 July 2011Ratings agencies could wreck Greek rescue by declaring it a default
... analysts say it is likely that ratings agencies could still brand the plan a default ...
Simon Derrick, chief currency strategist at BNY Mellon, said:
"When you compare the French plan to what the ratings agencies have said, it looks as though they would make it a default." ...
... Europe's insurers have invested up to €15bn in Greek government bonds, and could be drawn into any debt-swap plan.
Barclays Capital said the most heavily exposed European insurer was Italy's Generali: it has €3bn invested in Greek bonds.
Groupama and CNP Assurance of France are next, exposed to €2bn apiece. Ageas of Belgium, Munich Re and Germany's Allianz are also big investors.
Exposure for British insurers is said to be minimal.
On Friday, Munich Re said it had about €150m in Greek government debt falling due by 2014.
A spokesman said: "We still have to see what the rollover will look like … [EU] insurers and banks would be working to clarify details in the coming days." ...
Obs 03 July 2011 Bankocracy Log EU Coporate State Log
Greek debt crisis: ratings agency raises default fears over bonds
Europe's hopes of preventing Greece defaulting on its debts were knocked on Tuesday as ratings agency Fitch declared that it will declare the country to be in default if commercial banks agree to roll their loans over, as EU finance ministers are planning ...
"Fitch would regard such a debt exchange or voluntary debt rollover as a default event and would lead to the assignment of a default rating to Greece," Andrew Colquhoun, head of Asia-Pacific sovereign ratings with Fitch, told a conference in Singapore early on Tuesday ...
Open Europe estimates that each household in the eurozone underwrites €535 in Greek debt, through the existing loan guarantees.
By 2014, if a second bailout is agreed, this will increase to €1,450 per household, it claimed.
Gdn 21 June 2011 EU Corporate State Log
A Question of Sovereignty Financial TerrorismPrivate-sector voluntary aid may be impossible
European debt crisis
Timeline
Ratings agencies
Making the banks even less safe?
Having failed to spot the credit crunch, Moody's is now using blackmail to try to preserve open-ended government guarantees.
Moody's, the credit ratings agency, has an interesting take on the banking reforms unveiled by the Chancellor this week.
While the aim of George Osborne's ring-fencing proposals is to make the banking sector safer, Moody's says it will actually be more likely to downgrade the ratings it gives leading banks if the reformsproceed as expected.
Its argument is that once the banks have implemented ring-fencing, anything beyond the wall built around retail operations will no longer benefit from an implicit Government guarantee of support.
The non-ring-fenced assets would include the banks' corporate bonds, which Moody's and its fellow credit rating agencies would then deem to be more risky.
Ind 17 June 2011 Bankocracy Log Moody's
"More than two years after the end of the 2008 financial crisis, the US has still not been able to agree on a strategy for reversing its worsening financial situation," wrote Standard & Poor's managing director David Beers ...Time to limit the power of ratings agencies
The center-left Süddeutsche Zeitung writes:"The case of the US shows that it is time to limit the power of ratings agencies. Not because S&P was wrong in questioning America's credit rating. The doubt is well founded.Der Spiegel 20 Apr 2011 Alternatives to Borrowing
"Indeed, one wonders why S&P, and its two competitors Moody's and Fitch, hasn't long since stripped the US of its AAA rating.
"The step by S&P is a positive signal, because it counters accusations that US ratings agencies are more critical of European debtors than they are of American ones."
"But that's not the main issue. The verdicts of the ratings agencies are not dangerous because they are often wrong. Rather, they are dangerous because so much depends on them. ...
"The result is that the negative prognoses of the agencies are often self-fulfilling, as has been the case with debt-ridden euro-zone countries.
"The problem was particularly evident when the agencies gave ratings in 2007 that were much too high, thereby contributing to the financial crash."
UK risks losing top AAA credit rating if growth is lower than predicted
Britain could lose its prized AAA credit rating if George Osborne's latest growth forecasts prove too optimistic, ratings agency Moody's warned on Thursday.
Moody's cautioned that there was more chance UK economic growth would lag behind rather than exceed Osborne's predictions – which could thwart his drive to cut the deficit. This would create a significant risk that Britain could be downgraded, it said.
Osborne lowered his forecast for GDP growth this year and next year during Wednesday's budget, admitting that the recovery will be slower than thought until 2013.
"Although the weaker economic growth prospects in 2011 and 2012 do not directly cast doubt on the UK's sovereign rating level, we believe that slower growth combined with weaker-than-expected fiscal consolidation could cause the UK's debt metrics to deteriorate to a point that would be inconsistent with a AAA rating," Moody's said in a statement ...
Guardian 24 Mar 2011Moody's warns Britain over triple-A credit rating
Moody's, which downgraded Spain to its third highest rating of Aa2, highlighted the cost of rescuing its banking sector as a particular concern.New fears for Spain as banks fail stress tests and debt is downgraded
The ratings agency said the cost would be more than double the Banco de España estimate and would rise to more than €100bn under a rigorous stress test.
It said the government's recently announced acceleration of efforts to restructure the cajas was likely to strengthen the country's banking industry, but there remained "a meaningful risk" that the eventual cost of recapitalisation would be higher.
Moody's now believes the rescue package will cost between €40bn and €50bn – more than twice its own earlier estimate of €17bn.
"The heat has been turned up on the bubbling tensions in the eurozone," said Jane Foley, Rabobank currency strategist.
Investors have repeatedly voiced concerns about the opaque reporting of bank debts in Spain and Portugal.
Both countries are regarded as being next in line for rescue by the European Union and IMF if they appear unable to limit government spending and pay down their debts.
Guardian 10 Mar 2011Greek fury as Moody's slashes credit rating again
SEC Issues Report Cautioning Credit Rating Agencies
Credit rating agency#Criticism
Moody's Investors Service says UK's top credit rating looks safe
LONDON -- Moody's Investors Service says that Britain's top credit rating is safe because of steps the government is taking to restore economic strength and tackle the deficit.
The rating agency's announcement on Monday said the outlook for the British economy is challenging but manageable.
Moody's says it believes Britain “has the wherewithal and ability to meet these challenges whilst maintaining its Aaa rating.”
Britain has had an Aaa rating on long-term debt continuously since 1978.
China Post 21 Sept 2010
Senate Financial Reform Bill DOESN'T End Too Big To Fail
So much for ending Too Big To Fail.
The financial reform bill championed by the Obama administration and Senate Democrats as permanently ending the idea that large, interconnected financial institutions are too big to fail does no such thing, analysts at Moody's Investors Service cautioned today in a new report.
"[A] key issue that challenges the feasibility of the proposed legislation is that it would not fully eliminate the issue of interconnectedness, nor is it likely that resolution authority could fully eliminate the systemic implications of allowing a large and/or highly interconnected firm to default, especially with respect to large international groups, and it certainly would not eliminate the risk of contagion," the team of analysts led by Robert Young wrote.
"[T]he interconnectedness and contagion risks would not be completely eliminated, nor would the incentives and tools for regulators and the government to provide support via emergency liquidity or other programs that would continue to be part of the framework," they noted ...
Huffington Post 03 June 2010IMF warns time running out to tackle 'too big to fail' banks
Commission tackles too-big-to-fail banks
Too big to fail
How Moody’s sold its ratings — and sold out investors
WASHINGTON — AS THE HOUSING MARKET collapsed in late 2007, Moody’s Investors Service, whose investment ratings were widely trusted, responded by purging analysts and executives who warned of trouble and promoting those who helped Wall Street plunge the country into its worst financial crisis since the Great Depression.
A McClatchy investigation has found that Moody’s punished executives who questioned why the company was risking its reputation by putting its profits ahead of providing trustworthy ratings for investment offerings.
Instead, Moody’s promoted executives who headed its “structured finance” division, which assisted Wall Street in packaging loans into securities for sale to investors. It also stacked its compliance department with the people who awarded the highest ratings to pools of mortgages that soon were downgraded to junk. Such products have another name now: “toxic assets.”
As Congress tackles the broadest proposed overhaul of financial regulation since the 1930s, however, lawmakers still aren’t fully aware of what went wrong at the bond rating agencies, and so they may fail to address misaligned incentives such as granting stock options to mid-level employees, which can be an incentive to issue positive ratings rather than honest ones.
The Securities and Exchange Commission issued a blistering report on how profit motives had undermined the integrity of ratings at Moody’s and its main competitors, Fitch Ratings and Standard & Poor’s, in July 2008, but the full extent of Moody’s internal strife never has been publicly revealed.
indenvertimes.com 20 Oct 2009How Moody's sold its ratings - and sold out investors
Barney Frank Rousts Credit Rating Firm For...Being Too Negative?
After Moody's issued an unprecedented across-the-board negative credit outlook on all American cities and towns yesterday, House Financial Services Committee Chairman Barney Frank issued his own negative assessment of Moody's, and scheduled a hearing to investigate ...
On the face of it, this seems like a perverse round of messenger shooting.
But last March, as cities and towns across the country started getting flooded with demands for huge payouts rooted in arcane details of "swap" contracts they'd inked with banks that managed their bond offerings, Frank discovered something truly perverse: the public sector was being scammed on multiple fronts by the investment banks underwriting their bond offerings -- and the profits directly fed the disastrous trade of risky mortgage-linked credit default swaps that hastened the financial meltdown ...
TPM 09 Apr 2009
According to Minyanville, Tuesday's list was an attempt by Moody's to reclaim some of its former glory, which was lost when it failed to spot the banking collapse.Moody's "Bottom Rung" List Of 283 Companies At Risk Of Default
Moody's, along with fellow ratings agencies Standard and Poor's (MHP) and Fitch Ratings Services, played a major role in the recent financial market meltdown.Huffington Post 10 Mar 2009
Conflicts of interest with debt issuers, faulty models and lax internal controls all led to credit ratings that were unreliable at best, deceptive at worst.
Unfortunately for Moody's, gone are the days when investors valued haphazard assessments of credit risk.
The Bottom Rung, while generating ample work for Moody's customer-complaints department, isn't likely to reclaim any of the company's lost glory.Moody's List of Riskiest Companies Forgets to Include Moody's
When Junk Was Gold
In the summer of 2002, John Diaz, a managing director at Moody's Investors Service, was called before a US Senate subcommittee investigating the collapse of Enron.
The senators wanted to understand why Moody's had said that the energy trader's debt was investment-grade in late October of that year - only to see the company default on its bonds four weeks later as it declared bankruptcy ...
FT 18 Oct 2008How Moody’s faltered