Friday, February 27, 2009

Stupid Credit-Rating Jokes

Except that these are not jokes, the headline applies. "Credit-Rating" folks like S&P made a few bad calls recently:

*Bear Stearns, rated A+ as recently as October 2007, was rescued in a Federal Reserve-assisted transaction by JPMorganChase on March 14, 2008.

*AAA-rated FNMA [Fannie Mae] was put into receivership on September 7, 2008.

*AAA-rated FHLMC [Freddy Mac] was put into receivership on September 7, 2008.

*Lehman Brothers declared bankruptcy on September 15, 2008, but it had been rated A+ in May 2008.

*AIG, which had been rated AAA as recently as 2005, was rescued by the U.S. government on September 16, 2008.

*Kaupthing Bank, rated AAA as recently as February 2007, was nationalized by the Icelandic government on October 9, 2008.

*Wachovia, rted AA- in June 2008, was "purchased" by Citigroup on September 29 in a distressed merger, only to sell later at a higher price to Wells Fargo.

*Citigroup, rated AA as recently as December 2007, was rescued by the U.S. government on November 23, 2008.

Remember those "dumb predictions" like the one from the Patent Office guy who opined (in the early 1900's) that 'everything which could be invented has already been invented'? Or IBM's Watson opining that there will never be a need for 'small computers'?

HT: PowerLine

1 comment:

Anonymous said...

"Standard & Poor's" should be renamed "Standard so Poor". All these guys should be given some sort of tests before -- the majority would flunk a basic statistics exam and it is highly visible in the poor research and poor ratings! The regulators should go after them and get rid of the NRSRO status that is hurting everyone across the globe!