Why We Should Kill the Credit Rating Agencies

Now some-one is finally making a whole lot of sense.

Don't eliminate the credit rating agencies--instead let's institute the Rating Agency Revenue Clawback Tax Act of 2009 to impose a 50% excise tax on rating agency revenues going forward for the next 30 years to make them pay for their crappy ratings!!!

Dunn & Bradstreet (D&B) should also be tried & crucified for the racket they run. Their typical business reports include tons of erroneous information which ultimately leads to many small businesses being declined for credit from the stupid banks who insist on using D&B reports. In order for a business to be able to "correct" the errors, the poor business owner must pay D&B a $495 annual fee for the privilege of fixing D&B's own mistakes. It's disgusting!! I see D&B's downright slander of a business's creditworthiness over & over in my work as a financial consultant.

Sure, let's let Einhorn and other manipulators set the price.

Can we PLEASE also kill all the analysts?

With regard to personal credit ratings...you are responsible for repaying your debts and your credit worthiness, period. You are responsible for conducting your affairs and guarding your confidential information, period. If your personal credit rating is poor its your problem and likely your own doing with rare exception. Those who overextended themselves not thinking about when the bubble would burst have nobody to blame but themselves...802.

Credit Agencys are A load of Bullocks!!!!!! Ive paid my bills on time for the last year. My rating hasnt changed.. Its all a Scam. Investigate the Criminals that run the Agency Ill bet youll find that there credit is in Excellent Shape...... Try to get a loan at todays interest Rates you need excellent credit to even try to get a loan. there not helping by lowering the interest rates. Only people there helping are those Scum Bag Criminals That control Our Money.

Give it some time and keep paying those bills; you will need far more than a year...

It is kind of an amusing irony that the majority of these posts don't even understand who we are discussing. S&P and Moody's not Equifax and TRW or Transunion.

Why?............cause weez frogs in slowly heated waters.

Credit agencies are useless in the current market. Yesterdays papers.

Agree! These rating agencies are crap and their own stocks are crap. When are americans going to stop believing the fools who are trying to create wealth out of the air.

I agree, too much favoritism with these companies!

Everyone on here that believes that we are discussing PERSONAL credit, erase your posts or read the Wall Street Journal. Credit rating agencies have been employed by banks and trusted by investors for many years. For all those who actually know who credit agencies we are talking about are, issued rating are reflective of a company or products ability to pay back principle (and many times in a timely fashion) to the bond holders. The higher the rating, the lower the probablility of losing your principle payment. The range is usually 1/10,000 chance that a Aaa will default over a 10 yr span, ranging down to C-classes that show a higher chance (75%). Because of this, higher spread are required for lower classes. With that being said, in light of the new market, the subprime debocle was the start of a mass failure across the whole market ( any people feeling it was stemmed from the laying off of jobs in the Autumotive market). In this case, a very rare and unusual surge of defaults caused Structured Finance to fail. The ripple effects of Subprime (being packaged as RMBS and into CDOs, CLOs, etc.) were extreme. Because of this failure, other Structured Fi products have weakened. On the other end, corporate ratings have lowered due to exposure to Subprime. Many people don't understand that the writedown of these mortages are at a 100% severity, eventhough they can reclaim the properties in default and sell them. In addition, the fradulent behavior of mortage brokers ( phony W2's, etc) masked the inabilities of the homeowners- if government forms are being forged and oaths signed, How can others be held accountable. Does a Judge or Jury deserve punishment if they base their decision of a perjurious witness? Because of the inefficiency of liquidity within the market- banks inability to sell off structured fi because of widening spreads) or corporate bonds- liquidity ceasing occurred. With a ceasure in the credit markets, the media's inaccuracies/grandeur as well as a self-fulfilling prophecy, we are where we are now. Just remember, Who pushed for and passed a bill for low income loans? In 1994, Congress passed the Homeowners Equity Protection Act. If anyone of you can get through the legal verbosity, I urge you to read it. Remember- The Government.

I know what the difference is. i was just tooting my own horn for being responsible and living above my means. 794

Also, Look into the "Ownership Society" Plan (2001/2002) A large portion of the losses within the market was the concentration of investiments by many hege funds, fund of funds and Pension funds. Putting all your eggs in one basket is never a smart idea. Just because the goose laid a golden egg, doesn't mean all that all those to come won't be rotten ones. Would you put all of your money in one product/area? If you haven't- your pension fund managers might have. There is always a need to do your own due diligence to some point, but the intracacies of products and corporations can not all be known by one person. "He who claims to know everything, is truely ignorant." Get out there are form your own opinions, learn whats going one, because (hopefully) something of this nature and magnitude will only happen once in your life. Don't ever rely on others. In addition, the greed of CEO's and high up officials is not always spread amongst all parties within a particular industry. While bankers make the 500K bonuses, those are rarely seen on the Due Diligence and Rating side. look up any job's at this place and you'll see. It's finance, but its also acedemic in some repect.

I totally agree with paul. The market itself is the best regulator. Why regulate something that regulates itself? no wonder why everything is all messed up.

The inequality of information and the absence of a third party regulation would cause even more manipulation to the market and insider trading. People would start to count more upon the exploitation of arbitrage and not the actual products themselves. Too much turnover within a market can be disasterous if done at the same time- Volitility would increase and a dependable economy would be unattainable- causeing the dollar to weaken,etc. With some push for Laize faire, if the market tries to solely regulate itself, there are to many frictional forces to gain efficiency.

I actually have said the end is near for Credit Reporting agencies. They charge a fee for each pull they report. The banks and consumers pay the fees. They have gotten FILTHY rich off their self proclaimed report card system and they have the legal rights to all your personal information, you give it to them every time you sign up for credit. Whats really cool is I finally decided to not worry about my credit score. I pay cash or use other means. Their day is comming. The statment about how they use your score to cause you just enough problems to be charged more interest on loans is true. It has to be as they do not take your reported income into account when giving you a score. Ask them and they will tell you its many secret formulas and computer generated, yea, just like ole B Madoffs secret stew....lol... Its all a scam on the American Consumer. Signed former Loan Officer.

I agree with Matthew and Tmiller109--- DUH!!! I definitely feel that the ratings agencies have failed us. S&P and Moody's both had favorable ratings on Lehman Brothers bonds until 3 days prior to Lehman's filing bankruptcy. This caused most bond holders stuck holding a worthless bond that they will be lucky to recover pennies on the dollar from. Had the ratings agencies been doing their due dilligence the downgrading would have been done sooner and not as dramatically. Lehman dropped from A rated to C in one day ---- leaving no market to sell the bonds even at a deep discount before total bankruptcy. We depend on these agencies to help us determine which investments are safe to recommend. Worst day of my career so far to have to call several of my clients and tell them that an investment I recommended and felt was safe is now worthless. The agencies get paid by the corporations to rate their debt--- how ironic ---- seems to me that they have been scratching each other's back. I may not have the answer as to how to determine the rating or pricing of corporate debt going forward but there HAS TO be more regulation on these agencies to hold them accountable for ratings they place on companies otherwise it's all just a crap shoot.