This Week’s Sign The Lunatics Are Running The Asylum

From Bloomberg here:

Standard & Poor’s backtracked on ratings cuts issued last week and raised the ranking on commercial mortgage-backed debt from three bonds sold in 2007.

The securities, restored to top-ranked status, had been downgraded as recently as last week, making them ineligible for the Federal Reserve’s Term Asset-Backed Securities Loan Facility to jumpstart lending.

In other words, one of the rating agencies whose previous negligence and/or greed was near the core of the global financial blow-up would like folks to believe that these securities actually deserved to go from being top-rated, or AAA, to BBB- and then back to AAA in the space of a single week.

Pay no attention to the fact those securities were owned by institutions that paid Standard & Poor’s to rate them and that given the dour state of commercial real estate, those institutions really, really need access to TALF.

Here’s more on the deeply flawed ratings agencies.

Cale Smith

About Cale Smith

Portfolio Manager at Islamorada Investment Management.
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