Wednesday, September 23, 2009

Progress! Competition for the cow experts (MCO, MHP)

AlphaNinja - Bloomberg is reporting that Moody's (MCO) and cow-securitization-specialists Standard & Poors will face new competition when rating Commercial Mortgage Backed Securities:

"State insurance commissioners, seeking an alternative to rating firms Moody’s Investors Service and Standard & Poor’s, approved Realpoint LLC to evaluate commercial mortgage-backed securities in companies’ portfolios. The ruling by the National Association of Insurance Commissioners means state regulators can rely on Realpoint in determining how much capital must be held by insurers, Scott Holeman, spokesman for the group, said today. Realpoint provides analysis to bond buyers through subscription, while S&P and Moody’s are paid by companies that issue securities."

This is great news for taxpayers - still, it's unfortunate the level of incompetence among state treasurers and finance officials who outsource total evaluation of securities to outside ratings agencies that would do business with livestock:
S&P Official #1: Btw (by the way) that deal is ridiculous.
S&P Official #2: I know right...model def (definitely) does not capture half the risk.
S&P Official #1: We should not be rating it.
S&P Official #2: We rate every deal. It could be structured by cows and we would rate it:

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