Was Buffett Too Easy on Moody’s in FCIC Testimony?
Warren Buffett testified yesterday before the Financial Crisis Inquiry Commission along with Moody's Chairman and CEO Raymond McDaniel. The purpose of the hearing was to probe the failure of the rating agencies to accurately rate securities associated with subprime housing ...
Berkshire Hathaway Downgraded by S&P Despite Record High Book Value
Standard & Poor's has downgraded its long-term counterparty credit rating on Berkshire Hathaway to AA+ from AAA. The action also lowered the financial strength rating on Berkshire's insurance operations to AA+. The ratings were removed from Standard & Poor's credit ...
Credit Rating “Vigilantes” May Impose Fiscal Discipline
Those who followed politics in the early 1990s will recall the impact that “bond market vigilantes” had on the Clinton Administration’s fiscal policies. Will credit rating agencies replace the bond market as a form of fiscal discipline in the years ...
Morningstar Enters the Credit Ratings Fray
Morningstar has announced the launch of its corporate credit ratings initiative which will initially cover 100 companies with plans for expansion to 1,000 companies as additional credit analysts are hired in the coming months. As we have discussed in recent ...
Credit Rating Moats Keep Shrinking
The Wall Street Journal has reported that certain debt issuers, including Heineken N.V. and Credit Suisse Group, have been able to sell bonds without obtaining traditional credit ratings on the securities: While small in scope so far, the deals indicate ...
Moody’s: Berkshire’s Credit Default Swaps Overstate Risks
According to a Bloomberg article posted today, Moody's has come to the conclusion that credit default swaps tied to Berkshire Hathaway debt significantly overstate underlying risks. Moody's, which downgraded Berkshire Hathaway's credit rating in April, makes some observations that seem ...
The Federal Government’s “Safety Net” for Municipal Bonds Has Obvious Costs
Municipal bonds have traditionally been extremely safe investments with very low default rates and attractive tax exempt features for most investors. Municipal bond insurance has allowed state and local governments to obtain higher credit ratings, thereby generating significant interest savings ...
Improved Credit Rating Firms Oversight Cannot Substitute for Investor Vigilance
The well publicized failures of the credit rating agencies in recent years was the subject of intense scrutiny today at the SEC Roundtable on Credit Rating Agencies today in Washington DC. However, none of the reform proposals relieve investors of ...