The U.S. Securities and Exchange Commission, responding as credit-rating companies face pressure over subprime mortgage losses, proposed rules to prevent conflicts of interest and help investors distinguish rankings on asset-backed securities from other types of debt. This comes only days after we revealed that bullish forecasts from big investment banks like Morgan Stanley caused gasoline prices to rise 20 cents in one afternoon. (see article) Preventing conflicts of interest at this point in time is like trying to get the wild cat bag in the bag. A little late is it not? The SEC proposed today that raters such as Moody’s Investors Service and Standard & Poor’s Corp. be barred from guiding investment banks on gaining top rankings for structured- finance offerings.
Republican Commissioner Paul Atkins opposed recommendations on separate ratings symbols. We think the world needs to take a good, serious, detailed look at Paul Atkins. One does not rise to such a level by being an idiot, but even most idiots know there is a problem and something must be done. Meanwhile Atkins can thank Morgan Stanley for the increased cost of mowing his grass this past weekend. (Atkins most likely contracts the job to someone, and if they lose moeny he does not care. It is not his problem.)