Corrupt Rating Agencies Continue to Wreck the Financial System

Tepid Financial Times interview with Ray McDaniels, the head of Moody's. This rating agencies came in for harsh criticism following its role in the unfolding of the financial crisis. Moody's ultimately gave its imprimatur to shoddy financial and unsecuritized mortgage products and was complicit in covering up the indiscretions of the banking industry.

Several things to notice:
1) The US has been given a tripe A rating even though it is printing money out of fashion and has witnessed the wholesale collapse of its banking industry. How this equates to a tripe A rating is beyond human comprehension.
2) McDaniels makes the point that he does not have the last call in terms of deciding what rating is applied to which country - he says that Moody's decides things by "committee". Would this be the same rule-by-committee that failed to warn the world financial community of the coming collapse?
3) The reporter asks McDaniels if more mortgage-backed securities will be appearing on the market after the crisis. He answers, typically, in the affirmative.
4) McDaniels asserts that he wants to roll out a "process" that will allow talks about regulation to take place. He will not commit to framing regulations that might benefit the market. Everything remains as speculative as before.

Conclusion: the same crisis is going to play out yet but the endgame remains unknown.

Category:

News & Politics

Tags:

• moody's
• moody's rating scale
• financial times
• ray mcdaniels
• financial crisis
• speculation
• false derivatives
• derivatives
• banking
• banking cartel
• mortgage backed securities
• securities
• securitization
• economic collapse
• meltdown
• triple A rating
• finance economy politics