The Significance of The Triple-A Rating

For several months, I have been writing about the need for the Federal Government to take over the responsibility of the credit rating agencies. My argument is based on my opinion that credit ratings are to banking and investment management, what weights and measures are to commerce. Gas pumps and scales are checked by the local government for accuracy. The job and its responsibility are not left to the private sector of the economy. There is a reason for this. Consumers want to know that when they pay an amount for a gallon of gas, or a pound of meat, coffee or apples, that they are getting what they are paying for, a true and accurate measure. Should not the same be true for the billions of dollars of bonds and debt instruments of every stripe that are brought to market every year by investment bankers and their underwriting syndicates?

The mess that we find ourselves in today as it relates to the financial crisis, to include the bond market meltdown and the toxic assets being held by the banks, is that the credit rating agencies committed a fraud, several times over, in their pursuit of profit and higher levels of compensation for the people that run these for profit businesses. Where would we be as an economy if we could not trust the scales and pumps for the commodities that we buy everyday to sustain us? The problem is very real. This issue of trust in the credit rating business will hold back the economic recovery unless the Obama administration comes to realize the significance of the triple-A rating. The people in charge, believe it or not, are part of the problem. But, if enough public pressure is brought to bear and the people involved can no longer hold on to the status quo, then and only then, will change occur.

I need your help. We need to change the way business is done on Wall Street, but also the way business is done in the credit rating responsibility. The Federal Government must take over this function to bring trust and confidence to the triple-A rating. Banks and the very way banks operate require that the triple-A rating on a bond or debt instrument mean what it says.

Again, the financial crisis and the economy recovery can not be built on a foundation where the credit rating system is suspect. Help me by reading William K. Black’s interview with Bill Moyer, then make a hard copy with your computer printer and mail the hard copy of the interview to President Obama, The White House, 1600 Penna. Avenue, Washington, D.C. 20502

Working together, I think we can make a difference.

Stay tuned..