Posted on 03/17/2009 6:25:49 AM PDT by TigerLikesRooster
Rated F for Failure
By JEROME S. FONS and FRANK PARTNOY
WHEN Standard & Poor’s, the bond-rating agency, lowered General Electric’s rating to AA+, from AAA, last week, many were shocked at the tarnishing of one of America’s most revered corporations. But the real scandal is how long it took S.&P. to make that minor change — and that the other major ratings firm, Moody’s, still hasn’t — even though G.E.’s dividend has been slashed by two-thirds and its stock price had fallen below $7, from nearly $40 a year ago.
Why, more than a year into the crisis, do regulators and investors continue to rely on ratings? No one has been more wrong than Moody’s and S.&P. Less than a year ago both gave high ratings to 11 of the largest distressed financial institutions. They put the insurance giant A.I.G. in the AA category. They rated Lehman Brothers an A just a month before it collapsed. Until recently, the agencies maintained AAA ratings on thousands of nearly worthless subprime-related securities.
(Excerpt) Read more at nytimes.com ...
Ping!
Finally, regulators and investors should return to the tool they used to assess credit risk before they began delegating responsibility to the credit rating agencies. That tool is called judgment.
S&P - owned by McGraw-Hill - based in NYC. (McGraw-Hill also owns Business Week - very liberal)
What is the NYT’s rating, again?
With or without poor credit rating slapped on it, NYT is going down unless Zero impose defacto nationalization on it.
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