Can Nobody Stop This Madness?

In my opinion the biggest culprit in events leading to the recent economic collapse were the rating services who, in spite of growing evidence to the contrary, continued to issue positive reports on clearly sinking credit default swaps and other dicey vehicles. They did it in exchange for very large fees. Had, instead, they issued more cautionary ratings, the whole situation might not have been averted but alarms would have been raised earlier and the landing a lot softer.

You'd think they'd stop, or if not, somebody would stop them. But, not according to former Moody's analyst Eric Kolchinsky in todays Wall Street Journal

Here's more from Reuters:

"With nearly $3 trillion of rated bonds, the insurance industry is the largest sector of the U.S. financial services industry to rely on capital ratings, according to the National Association of Insurance Commissioners (NAIC).

The three leading ratings firms -- Moody's, Fitch and Standard & Poor's -- have been criticized for fueling the financial crisis by assigning and maintaining high ratings on mortgage-backed securities, even as concerns about the health of the U.S. home market grew.

The NAIC, which represents state insurance regulators, wants to lessen its reliance on the ratings firms, according to a March report. The group has also held discussions over whether to launch its own system for assigning ratings."

Can nobody put a stop to this?

Read the entire article in Wall Street Journal here

Or, read a summary of this in Huffington Post here

Read more at: http://www.huffingtonpost.com/2009/09/23/eric-kolchinsky-moodys-wh_n_295789.html

Read more at: http://www.huffingtonpost.com/2009/09/23/eric-kolchinsky-moodys-wh_n_295789.html