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Showing posts from August, 2010

No Legal or Official Reason to Trust the Rating Agencies

I had posted this on my facebook wall some time ago, which is not easy to search through nor is it well-suited for blog-size posts. Hence reproducing here as the information is eye-opening.

“they’re winning because this is not a level playing field.”

The Ratings agencies (Standard & Poor’s, Moody’s and Fitch):

1. have NO duty to be correct.
...'the companies didn’t owe ... a “duty” — a legal obligation that could form the basis of a negligence claim'

2. have NO shared responsibility.
'judges have rejected the idea that the rating agencies worked so closely with the investment banks that they were essentially co-underwriters'

3. are NOT experts
'a regulation exempts rating agencies from the definition of “experts” who can be sued'

4. have NO conflict of interest - because you already know about it!
'it has been around so long and is so widely known that it isn’t a cause of action'

5. are merely expressing OPINIONS
'their grades are just opinions ab…