Here is a quote from Sunday's New York Times that says it all for me.
"What you see in these bills are Botox shots." Joseph A. Grundfest, a professor of securities law at Stanford Law School, on what he sees as inadequate bills to overhaul the Big Three credit rating agencies. "For a little while, everyone is going to be frozen into a grin, and then the shots are going to wear off," he said.
It is good to see someone else beating on the same drum for once with me. I have written about the credit rating agencies and what role they play in the mortgage business in the 21st century. President Obama can beat on the bankers all he wants, but cleaning up the Big Three credit rating agencies would go a long way towards bringing housing back, both for those wanting to buy as well as those wanting to sell. Mortgage-backed bonds are not the problem. Giving mortgage-backed bonds the proper rating is the problem.
Again, the Fed should decide what is triple-A and what is not triple-A. With the Fed behind the triple-A rating, the mortgage-backed bonds can start trading again. This is a small piece of the puzzle, but a very important piece of the puzzle. Congress does not begin to understand the significance the Big Three credit rating agencies play in this mortgage bond process. Without creditable credit rating agencies, there will be no housing recovery.
Stay tuned.
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1 comment:
I've learned one thing this year if nothing else. There is no shame on Wall Street. They even laugh in the taxpayers face.
Maybe we should limit the number of lobbyists allowed on Washington on any given day. Pretty bad when they out number the Congress by 3:1.
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