Skip to main content

View Diary: S&P possibly to rate sub-prime securities higher than U.S. Treasury Bonds (19 comments)

Comment Preferences

  •  In the past (0+ / 0-)

    the contents of the tranches was not well understood and the junk got rated at AAA too.  That's part of the reason why we're in the mess we're in with mortgage backed.  And S&P and the other agencies were the ones rating that stuff.

    •  The truly awful parts only got rated AAA (1+ / 0-)
      Recommended by:

      when they re-combined them in synthetic pools along with credit default swaps.  This baffles me, since i don't see how the super senior tranch of a CDO squared or whatever can ever be rated higher than the rating given to the highest piece of the component CDOs, just as a matter of pure logic.  So I agree S&P's model failed, but because there's tranching it's not an apples-to-apples comparison with the rating of U.S. treasury debt.  Hopefully they changed their models at least somewhat.

      "This world demands the qualities of youth: not a time of life but a state of mind[.]" -- Robert F. Kennedy

      by Loge on Wed Aug 31, 2011 at 11:40:01 AM PDT

      [ Parent ]

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site