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It's really hard to take Moody's seriously following their ratings for garbage MBSs. https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the_subprime_cris

It's really hard to take Moody's seriously following their ratings for garbage MBSs. https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the_subprime_crisis#Competitive_pressure_to_lower_standards https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the... Just a complete garbage company that is rotten to the core. Hell, its president is still the same person that was in charge before and during the recession caused, in large part, by his choices.

janalsncm 4y ago
There’s definitely an unholy relationship between banks, rating agencies, and regulators. Just like Art appraisers, agreeable ones eat a lot better than skeptical ones. But it also reminds me of the joke: if the Pope tells you he believes in God that just means he’s doing his job. If he tells you he’s beginning to have doubts, maybe he’s onto something.
- unzadunza 4y ago
  I just realized it’s really easy to upvote a comment accidentally while scrolling on my phone with my left thumb (I’m a lefty). But what the heck, I like that joke.
  - mikestew 4y ago
    You should have been here before the "unvote/undown" links (which, BTW, might be what you're looking for: it's on the same line as the comment header). "Apologies for the downvote, on mobile", "why isn't there undo for votes?", etc. A lot like discussions when a paywalled article comes up. :-)
- gowld 4y ago
  In US Law (Hearsay doctrine) that's called "admission against interest". Demonstrably self-harming statements are presumed to be honest. (The ways this can be abused by liars are interesting. Example: a parent confessing to a crime their child committed.)
6stringmerc 4y ago
You are correct and also wrong concurrently due to it being such a large organization with fingers in too many kitchens to be responsible. They have done good work in certain fields and are not the only game in town. Are the other agencies any better? My experience is a big phat NOPE same porn-set-relationship-odor in the business for my taste. There are minors in munis that stick to being legit, but ratings are ephemeral the moment they're published anyway. Funny you don't mention AIG and how nobody there went to jail. I even know of one guy who back-dated securities to help out a buddy. Using taxpayer money. The industry is rife for a 70% pay haircut so real people can do real work in the real world. Finance itself shouldn't be an industry, it's a service. It's hard for me to take anything seriously which is why I prefer the barter system and being an outlaw from society and only dropping in when I need. All of this is a sad, broken joke with no viable paths upward. Not yet at least.
- itsoktocry 4y ago
  >Finance itself shouldn't be an industry, it's a service. Two weeks ago people would have described SVIB just like this. Have a look at Twitter, people all over describing how they did things that no one else would do, the people's bank.
nealabq 4y ago
Who rates the ratings agencies? Seriously. How can I compare Fitch, S&P and Moody's? Is there any way an outsider can disrupt their triopoly?
- didericis 4y ago
  You could create an insurance company, do your own analysis, and correct for bad ratings by offering insurance to those you think are more solid than their ratings suggest and refuse it from those who you think are rated too highly. (My Dad is about to retire from a company that does this)
- JumpCrisscross 4y ago
  > How can I compare Fitch, S&P and Moody's? There is academic research into ratings quality, i.e. ex post facto analysis of credit ratings. Sort of like buying skis, there's no best rating agency for all products.
nimbius 4y ago
found the American ;) all joking aside, these sorts of watermarks regardless of their altruistic authenticity or perfection were routinely downplayed and ignored during the 2008 collapse. the Bush administration for all its best efforts literally devolved into a propaganda instrument with daily or weekly updates amounting to little more than wishful thinking at best, or wholesale deception at worst. It feels like the finance of capitalism is some Heisenbergian monstrosity that, when functional and performant is observable and available for introspection and critique however once the wheels begin to fall off all hell breaks loose and we wind up with adolescent thinking that does all it can to elicit thoughts and prayers in an almost cargo cult performance random crap that often just serves as noise to drown out the human misery of the system itself.
- adhesive_wombat 4y ago
  And then when finally called on it, they're just "opinions". https://youtu.be/zIGThxn_eGk https://youtu.be/zIGThxn_eGk Very profitable opinions, for sale.
JumpCrisscross 4y ago
> hard to take Moody's seriously following their ratings for garbage MBSs Do you have evidence their MBS ratings failed? Obviously, it's impossible to say given the massive government intervention. But AAA-rated mortgage products paid out as statistically expected. What they didn't do is hold mark-to-market value. That is what screwed people in banking who, seemingly repeatedly, can't get their heads around the difference between intrinsic and market value, on one hand, and liquidity, on the other hand. It's analogous to the hold-to-maturity debacle that felled Silicon Valley Bank.
- nerdponx 4y ago
  I think they're talking about what happened in 2008, not in 2023.
  - JumpCrisscross 4y ago
    > they're talking about what happened in 2008, not in 2023 Yes. The AAA-rates tranches which traded pennies on the dollar in ‘08 largely paid out as expected. That didn’t help banks trying to rely on them as their capital. But it noisily validated the ratings quality of those tranches. (Noisily because, again, massive government intervention.)
    - jjeaff 4y ago
      That seems unlikely that they paid out as expecting considering we had record levels of default. The mark to market value of the MBSs didn't collapse because of increasing interest rates. They collapsed because of heavily increasing defaults.
      - johngladtj 4y ago
        The waybs were structured the upper tranches were more or less isolated from the defaults
      - JumpCrisscross 4y ago
        > seems unlikely that they paid out as expecting considering we had record levels of default Risk cannot be destroyed, but it can be moved. Tranching lets one control this. So if 95% of a pool default, and 5% don't, and you prioritize their payments to a premium tranche, that premium tranche will continue performing. (The specifics are more complicated [1].) [1] http://quantlabs.net/academy/download/free_quant_instituitional_books_/%5BBank%20of%20America%5D%20Introduction%20to%20Agency%20CMO%20Structures.pdf http://quantlabs.net/academy/download/free_quant_instituitio...

janalsncm 4y ago

There’s definitely an unholy relationship between banks, rating agencies, and regulators. Just like Art appraisers, agreeable ones eat a lot better than skeptical ones. But it also reminds me of the joke: if the Pope tells you he believes in God that just means he’s doing his job. If he tells you he’s beginning to have doubts, maybe he’s onto something.

unzadunza 4y ago
I just realized it’s really easy to upvote a comment accidentally while scrolling on my phone with my left thumb (I’m a lefty). But what the heck, I like that joke.
- mikestew 4y ago
  You should have been here before the "unvote/undown" links (which, BTW, might be what you're looking for: it's on the same line as the comment header). "Apologies for the downvote, on mobile", "why isn't there undo for votes?", etc. A lot like discussions when a paywalled article comes up. :-)
gowld 4y ago
In US Law (Hearsay doctrine) that's called "admission against interest". Demonstrably self-harming statements are presumed to be honest. (The ways this can be abused by liars are interesting. Example: a parent confessing to a crime their child committed.)

6stringmerc 4y ago

You are correct and also wrong concurrently due to it being such a large organization with fingers in too many kitchens to be responsible. They have done good work in certain fields and are not the only game in town. Are the other agencies any better? My experience is a big phat NOPE same porn-set-relationship-odor in the business for my taste. There are minors in munis that stick to being legit, but ratings are ephemeral the moment they're published anyway. Funny you don't mention AIG and how nobody there went to jail. I even know of one guy who back-dated securities to help out a buddy. Using taxpayer money. The industry is rife for a 70% pay haircut so real people can do real work in the real world. Finance itself shouldn't be an industry, it's a service. It's hard for me to take anything seriously which is why I prefer the barter system and being an outlaw from society and only dropping in when I need. All of this is a sad, broken joke with no viable paths upward. Not yet at least.

itsoktocry 4y ago
>Finance itself shouldn't be an industry, it's a service. Two weeks ago people would have described SVIB just like this. Have a look at Twitter, people all over describing how they did things that no one else would do, the people's bank.

nealabq 4y ago

Who rates the ratings agencies? Seriously. How can I compare Fitch, S&P and Moody's? Is there any way an outsider can disrupt their triopoly?

didericis 4y ago
You could create an insurance company, do your own analysis, and correct for bad ratings by offering insurance to those you think are more solid than their ratings suggest and refuse it from those who you think are rated too highly. (My Dad is about to retire from a company that does this)
JumpCrisscross 4y ago
> How can I compare Fitch, S&P and Moody's? There is academic research into ratings quality, i.e. ex post facto analysis of credit ratings. Sort of like buying skis, there's no best rating agency for all products.

nimbius 4y ago

found the American ;) all joking aside, these sorts of watermarks regardless of their altruistic authenticity or perfection were routinely downplayed and ignored during the 2008 collapse. the Bush administration for all its best efforts literally devolved into a propaganda instrument with daily or weekly updates amounting to little more than wishful thinking at best, or wholesale deception at worst. It feels like the finance of capitalism is some Heisenbergian monstrosity that, when functional and performant is observable and available for introspection and critique however once the wheels begin to fall off all hell breaks loose and we wind up with adolescent thinking that does all it can to elicit thoughts and prayers in an almost cargo cult performance random crap that often just serves as noise to drown out the human misery of the system itself.

adhesive_wombat 4y ago
And then when finally called on it, they're just "opinions". https://youtu.be/zIGThxn_eGk https://youtu.be/zIGThxn_eGk Very profitable opinions, for sale.

JumpCrisscross 4y ago

> hard to take Moody's seriously following their ratings for garbage MBSs Do you have evidence their MBS ratings failed? Obviously, it's impossible to say given the massive government intervention. But AAA-rated mortgage products paid out as statistically expected. What they didn't do is hold mark-to-market value. That is what screwed people in banking who, seemingly repeatedly, can't get their heads around the difference between intrinsic and market value, on one hand, and liquidity, on the other hand. It's analogous to the hold-to-maturity debacle that felled Silicon Valley Bank.

nerdponx 4y ago
I think they're talking about what happened in 2008, not in 2023.
- JumpCrisscross 4y ago
  > they're talking about what happened in 2008, not in 2023 Yes. The AAA-rates tranches which traded pennies on the dollar in ‘08 largely paid out as expected. That didn’t help banks trying to rely on them as their capital. But it noisily validated the ratings quality of those tranches. (Noisily because, again, massive government intervention.)
  - jjeaff 4y ago
    That seems unlikely that they paid out as expecting considering we had record levels of default. The mark to market value of the MBSs didn't collapse because of increasing interest rates. They collapsed because of heavily increasing defaults.
    - johngladtj 4y ago
      The waybs were structured the upper tranches were more or less isolated from the defaults
    - JumpCrisscross 4y ago
      > seems unlikely that they paid out as expecting considering we had record levels of default Risk cannot be destroyed, but it can be moved. Tranching lets one control this. So if 95% of a pool default, and 5% don't, and you prioritize their payments to a premium tranche, that premium tranche will continue performing. (The specifics are more complicated [1].) [1] http://quantlabs.net/academy/download/free_quant_instituitional_books_/%5BBank%20of%20America%5D%20Introduction%20to%20Agency%20CMO%20Structures.pdf http://quantlabs.net/academy/download/free_quant_instituitio...