(((Gosh, no wonder people are fleeing headlong to the Lovecraftian peace and sanity of a new economic dark age.)))
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a6IUhwiGVuEQ
Link: Bloomberg.com:
News.
May 22 (Bloomberg) – Moody's Corp., owner of the second- largest credit-rating company, may have its commercial paper ranking cut by its bigger competitor Standard & Poor's.
S&P today placed Moody's A-1 short-term debt rating on CreditWatch negative, citing reports that a computer error may have caused Moody's to give Aaa ratings to debt that didn't deserve them.
(((I guess it could have been worse – the software might have given lethally bad credit ratings to companies that were perfectly sound.
'Hey Bear Stearns! You were great all along! Sorry we destroyed you!')))Moody's shares tumbled 21 percent in the past two days after the New York-based company said it is probing whether executives covered up a computer error that gave undeserved top ratings to constant proportion debt obligations, funds that used borrowed money to bet on credit-default swaps. S&P analysts also awarded AAA ratings to the CPDOs. (((Hey, I think there's an empty desk next to Jerome
Kerviel.)))In putting Moody's rating under review, S&P cited broader declines in revenue that have affected both companies since the collapse of the subprime home loan market sapped new issues of mortgage-backed bonds and collateralized debt obligations, which package pools of debt into new securities.
This comes at a time when expected declines in revenue and cash flow at Moody's in 2008 are expected to meaningfully reduce flexibility in the company's leverage profile,'' S&P analysts led by Emile Courtney said in the report.These concerns are exacerbated by the potential impact of the previously mentioned press reports.'' (((In other words, there's a brisk potential that credit-rating companies may go broke because there's no more credit-rating business.)))Two Providers
S&P spokesman Christopher Atkins declined to comment. S&P analyst Courtney didn't immediately return phone calls.
``It's unfortunate that we have been put on negative watch, but we are pleased that S&P confirmed our liquidity position,'' Anthony Mirenda, a spokesman for Moody's, said. ((('We've got money! Really! It's in here somewhere. I think it's stuck under that disembowled Cisco router.')))
S&P and Moody's are the two dominant providers of credit ratings. Moody's also rates S&P parent McGraw-Hill Cos., assigning its unsecured debt an A1 rating, the fifth-highest investment grade.
``They're starting to feed on each other,'' said Janet Tavakoli, president of Chicago-based Tavakoli Structured Finance Inc., which advises banks and hedge funds...
