Sweetheart Deal for Rating Firms

Too little, way too late:

"Under fire for the high ratings they awarded to subprime mortgage securities, three large credit rating firms are close to announcing a broad deal with the New York attorney general to reform some of their core business practices, according to people briefed on the investigation.

Most significantly, the rating firms are considering changing how they charge fees for ratings to make it harder for investment banks to play the firms against one another to obtain a better rating, these people say, adding that negotiations are ongoing and the deal could still fall apart.

As part of the deal being discussed, the firms — Standard & Poor’s, Moody’s Investors Service and Fitch Ratings — would also aid Attorney General Andrew M. Cuomo’s broader investigation into how Wall Street packaged mortgages into securities, in exchange for immunity from prosecution. And the rating agencies will establish new standards for how investment banks review mortgage loans . . .

Under the proposed deal with Mr. Cuomo, a rating agency would charge fees in stages for various analytical tasks — not just the rating, which acts as a sort of grade for investors. They will also disclose every three months all deals that they were asked to rate and all the deals they end up rating, providing investors more information than is now available."

What a limp, pathetic deal. It almost makes you miss former Attorney General Eliot Spitzer . . .


Rating Firms Seem Near Legal Deal on Reforms
NYT, June 4, 2008

S&P Slashes Ratings of Big Banks 

Category: Credit, Derivatives, Legal

Blogroll Changes

Category: Weblogs

Inflation, Zimbabwe Style

Via Prieur du Plessis’ website, we see that inflation in Zimbabwe remains slightly elevated (Fortunately for the Mugabe regime, Core Inflation remains contained): > > Fortunately for the Mugabe regime, Core Inflation remains contained . . .

Category: Inflation

Perception versus Value

Category: Credit, Derivatives, Finance, Financial Press

FASB Bombshell: FAS 140 to Eliminate QSPEs

Category: Credit, Derivatives, Legal

More Financial Turmoil

Category: Corporate Management, Credit, Derivatives, M&A

Bernanke: Rates Are Well Positioned to Spur Growth

Category: Credit, Economy, Federal Reserve, Inflation

Uh-Oh: Economist Cover on Oil

Category: Commodities, Contrary Indicators, Energy, Financial Press

Saut: No Bottom in Financials, Housing

Jeffrey Saut, chief investment strategist at
Raymond James & Associates in St. Petersburg, Florida, talks about the outlook for financial and housing markets, investing in
dividend-paying stocks, and some of his equity recommendations.

click for radio

Jeffrey Saut Doesn’t See Bottom in Financials, Housing


Jeffrey Saut Doesn’t See Bottom in Financials, Housing: Video
Bloomberg,     June 3 2008

Category: Video

Corporate vs Personal Income Taxes

Category: Corporate Management, Dividends, Taxes and Policy