The most important and well-known rating agencies are Moody’s, Standard & Poor’s and Fitch Ratings. The reason: they are in bed with the FED because the huge collateral business at the Federal Reserve has to be evaluated by those three. On the other hand, these outlets are quoted on the Stock Exchange. The potential conflict of interest between profit/shareholders and independency is obvious and we all suffer the consequences.
Now this is what we’re reading on Bloomberg:
The U.S. Federal Reserve may revise rules that currently favor Moody’s Investors Service, Standard & Poor’s and Fitch Ratings, Fed Chairman Ben S. Bernanke said in a letter released today by Connecticut Attorney General Richard Blumenthal. The Fed is "conducting a broad review of our approach to using rating agencies," Bernanke said in an April 13 letter written in response to a complaint from Blumenthal that the central bank’s rules unfairly favor the companies that helped cause the financial crisis. "That review encompasses the ratings of securities of all types accepted as collateral at all our recently established credit facilities as well as collateral accepted to secure regular discount window loans," Bernanke wrote. David Skidmore, a Fed spokesman, didn’t return calls seeking additional comment. The Fed currently only accepts collateral evaluated by the "major" nationally recognized statistical ratings organizations, or NRSROs, Bernanke said. Because "the number of NRSROs is expanding" the Fed is conducting its review, he said."
The consequences for these stocks are clear.
Now this is what we’re reading on Bloomberg:
The U.S. Federal Reserve may revise rules that currently favor Moody’s Investors Service, Standard & Poor’s and Fitch Ratings, Fed Chairman Ben S. Bernanke said in a letter released today by Connecticut Attorney General Richard Blumenthal. The Fed is "conducting a broad review of our approach to using rating agencies," Bernanke said in an April 13 letter written in response to a complaint from Blumenthal that the central bank’s rules unfairly favor the companies that helped cause the financial crisis. "That review encompasses the ratings of securities of all types accepted as collateral at all our recently established credit facilities as well as collateral accepted to secure regular discount window loans," Bernanke wrote. David Skidmore, a Fed spokesman, didn’t return calls seeking additional comment. The Fed currently only accepts collateral evaluated by the "major" nationally recognized statistical ratings organizations, or NRSROs, Bernanke said. Because "the number of NRSROs is expanding" the Fed is conducting its review, he said."
The consequences for these stocks are clear.
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