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• The major agencies, credit rating: Are manufactured crises or cope with treatments?
Friday, January 6, 2012
Rahman Ayas
Exposed and the international credit rating agencies of the three largest in the world of criticism since the financial crisis that swept the world between 2008 and 2009. P «Standard & Poor's» and «Moody's» and «Fitch», which take the whole of the United States-based, accused of breach of its obligations towards the investors, as it issued ratings positive for financial institutions, it soon suffered during the crisis, including the «Lehman Brothers», which like its collapse in September 2008 was the start of the global crisis, and bonds are dangerous, such as mortgage-related securities, which contributed to later in the collapse of the U.S. housing sector.
Since 2010 agencies have focused on the sovereign debt of American and European, and included the reduction is not unprecedented «Standard & Poor's» in August last credit rating of the American degree AAA excellent received by Washington for decades, the so-called boom sale of global financial instruments and troubled in markets of the globe is unprecedented since late 2010. Since the mid-2010, ratings agency cut Greece, Portugal and Ireland to low levels, they failed to European politicians, senior agencies, exacerbating the crisis the euro area.
And took the United States and Europe, measures to regulate the three major agencies and ensure the enjoyment of greater transparency and competitiveness. Washington issued in July (July 2010) the foundations of law «Office of Credit Ratings» in «the Securities and Exchange Commission» to work on the accounting agencies and the protection of investors and business. The European Union in early 2011 founded the independent body as «authority of European bonds and markets» charge of organizing the activities of rating agencies, according to EU standards.
The aim of this agency to D investors around the world in-depth analysis of the risks associated with bond debt. These include government bonds, treasury bonds, corporate bonds and certificates of deposit, municipal bonds and preferred shares and bonds secured (secured debt include bonds) and bonds based on mortgages. The return of risk associated with investing in these bonds to the possibility of failure of issuers in the payment of interest due on the debt on time.
Categories consist of Latin characters, such as AAA, which is the highest rank, then lower to the classifications ranging Vhrv two characters, ie, AA and A, and then to the following characters, up to the last character, with the addition of a plus or a minus sign here and there. And the impact of the three ratings agencies and investors, in large markets around the world. And exposed agencies to criticism because those who have ranked them pay their fees, before the available categories for free to investors and the public, a development that dates back to the seventies of the twentieth century ago, investors were asking rated and paying the price, but the agency turned to collect their fees from issuers, because these more Categories desire of investors in order to promote their publications.
And small agencies
There is a small rating agencies still charge their fees from investors, according to the older method, but they usually face a rejection of the issuers of cooperation, therefore content themselves with the public to review the data related to them. And its counterpart agencies accuse of monopolizing the largest market category, and the economic studies of scientific prefer ratings agencies that charge their fees from investors.
During the global financial crisis, were the three agencies to accountabilities in Congress and faced lawsuits from investors to those affected, it is suspected that it has issued misleading ratings. Also accused the downgraded bonds associated with the U.S. real estate market to levels considered by investors as a tip to withdraw their investments, to make a market as soon as the signs of weakness, after they had been classified by the AAA. The value of real estate bonds, which reduced «Moody» classification, for example, 869 billion dollars. The main complaint is that the agencies failed to act in the form of faster.
It was noted that «Moody» made only from the classification of complex securities that were a major cause of the crisis, highly rated, some 881 million dollars in 2006, more than all the proceeds of the agency in 2001. And defended the ratings agency said that the classifications were issued for the committees, rather than individual experts, and that the proceeds of the members of the committees were not calculated according to the ratings that were they come to it. She stressed that investors pay for their fees can be a pressure to reduce the classifications, Valsndhat classified fraught with the dangers of the largest revenue generating more substantial.
In Europe, began the problem of the euro area with the rating agencies, while reduced «Standard & Poor's» in April (April 2010) sovereign debt rating Greek to a degree dangerous to lose investor confidence in Greece and the depth of the financial crisis in the country, and forced the European Union and the International Monetary Fund to provide packages huge saving to Athens. And this was repeated with Ireland and Portugal.
And hampered the agency's own efforts to European creditors to a part of Greece's debt in the second half of 2011, it announced that it would be classified as any step in this direction as Greece, stopped by to pay the interest payments on the debt. The strong response by the German Chancellor Angela Merkel, who said: «important not to allow others to Bmna our ability to make decisions». Some experts did not hesitate to adopt the point of «Standard & Poor's» on the grounds that any download some of the burden of creditors does not mean actually voluntary rescheduling of debts from creditors.
European officials have accused the three rating agencies favoring the United States, it is maintained until August on the AAA-rated although they have been suffering for months, a deficit is not sustainable in its budget and becoming higher and higher levels of public debt. He was astonished that European Commission President Jose Manuel Barroso's insistence agencies to put pressure on European countries tried to anticipate the arrival of the crisis that has taken concrete decisions to adjust the public finances, accusing the agencies to «bias» against Europe. He urged European officials, including Commissioner for internal markets and services, Michel Barnier, and the establishment of an independent European rating agency.
Has not delivered the agencies of the arrows of U.S. officials, has a cut «Standard & Poor's» classification of the United States, called her and U.S. Treasury Secretary Timothy Geithner of having «a lack of amazing to knowledge», especially the Democrats and Republicans were reached before the downgrade and after weeks of give and take, to mechanism prevented the federal government to stop the payment of dues. The Agency responded that the United States, despite the agreement on the mechanism, has not taken adequate measures to curb the rapidly growing debt.
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Friday, January 6, 2012
Rahman Ayas
Exposed and the international credit rating agencies of the three largest in the world of criticism since the financial crisis that swept the world between 2008 and 2009. P «Standard & Poor's» and «Moody's» and «Fitch», which take the whole of the United States-based, accused of breach of its obligations towards the investors, as it issued ratings positive for financial institutions, it soon suffered during the crisis, including the «Lehman Brothers», which like its collapse in September 2008 was the start of the global crisis, and bonds are dangerous, such as mortgage-related securities, which contributed to later in the collapse of the U.S. housing sector.
Since 2010 agencies have focused on the sovereign debt of American and European, and included the reduction is not unprecedented «Standard & Poor's» in August last credit rating of the American degree AAA excellent received by Washington for decades, the so-called boom sale of global financial instruments and troubled in markets of the globe is unprecedented since late 2010. Since the mid-2010, ratings agency cut Greece, Portugal and Ireland to low levels, they failed to European politicians, senior agencies, exacerbating the crisis the euro area.
And took the United States and Europe, measures to regulate the three major agencies and ensure the enjoyment of greater transparency and competitiveness. Washington issued in July (July 2010) the foundations of law «Office of Credit Ratings» in «the Securities and Exchange Commission» to work on the accounting agencies and the protection of investors and business. The European Union in early 2011 founded the independent body as «authority of European bonds and markets» charge of organizing the activities of rating agencies, according to EU standards.
The aim of this agency to D investors around the world in-depth analysis of the risks associated with bond debt. These include government bonds, treasury bonds, corporate bonds and certificates of deposit, municipal bonds and preferred shares and bonds secured (secured debt include bonds) and bonds based on mortgages. The return of risk associated with investing in these bonds to the possibility of failure of issuers in the payment of interest due on the debt on time.
Categories consist of Latin characters, such as AAA, which is the highest rank, then lower to the classifications ranging Vhrv two characters, ie, AA and A, and then to the following characters, up to the last character, with the addition of a plus or a minus sign here and there. And the impact of the three ratings agencies and investors, in large markets around the world. And exposed agencies to criticism because those who have ranked them pay their fees, before the available categories for free to investors and the public, a development that dates back to the seventies of the twentieth century ago, investors were asking rated and paying the price, but the agency turned to collect their fees from issuers, because these more Categories desire of investors in order to promote their publications.
And small agencies
There is a small rating agencies still charge their fees from investors, according to the older method, but they usually face a rejection of the issuers of cooperation, therefore content themselves with the public to review the data related to them. And its counterpart agencies accuse of monopolizing the largest market category, and the economic studies of scientific prefer ratings agencies that charge their fees from investors.
During the global financial crisis, were the three agencies to accountabilities in Congress and faced lawsuits from investors to those affected, it is suspected that it has issued misleading ratings. Also accused the downgraded bonds associated with the U.S. real estate market to levels considered by investors as a tip to withdraw their investments, to make a market as soon as the signs of weakness, after they had been classified by the AAA. The value of real estate bonds, which reduced «Moody» classification, for example, 869 billion dollars. The main complaint is that the agencies failed to act in the form of faster.
It was noted that «Moody» made only from the classification of complex securities that were a major cause of the crisis, highly rated, some 881 million dollars in 2006, more than all the proceeds of the agency in 2001. And defended the ratings agency said that the classifications were issued for the committees, rather than individual experts, and that the proceeds of the members of the committees were not calculated according to the ratings that were they come to it. She stressed that investors pay for their fees can be a pressure to reduce the classifications, Valsndhat classified fraught with the dangers of the largest revenue generating more substantial.
In Europe, began the problem of the euro area with the rating agencies, while reduced «Standard & Poor's» in April (April 2010) sovereign debt rating Greek to a degree dangerous to lose investor confidence in Greece and the depth of the financial crisis in the country, and forced the European Union and the International Monetary Fund to provide packages huge saving to Athens. And this was repeated with Ireland and Portugal.
And hampered the agency's own efforts to European creditors to a part of Greece's debt in the second half of 2011, it announced that it would be classified as any step in this direction as Greece, stopped by to pay the interest payments on the debt. The strong response by the German Chancellor Angela Merkel, who said: «important not to allow others to Bmna our ability to make decisions». Some experts did not hesitate to adopt the point of «Standard & Poor's» on the grounds that any download some of the burden of creditors does not mean actually voluntary rescheduling of debts from creditors.
European officials have accused the three rating agencies favoring the United States, it is maintained until August on the AAA-rated although they have been suffering for months, a deficit is not sustainable in its budget and becoming higher and higher levels of public debt. He was astonished that European Commission President Jose Manuel Barroso's insistence agencies to put pressure on European countries tried to anticipate the arrival of the crisis that has taken concrete decisions to adjust the public finances, accusing the agencies to «bias» against Europe. He urged European officials, including Commissioner for internal markets and services, Michel Barnier, and the establishment of an independent European rating agency.
Has not delivered the agencies of the arrows of U.S. officials, has a cut «Standard & Poor's» classification of the United States, called her and U.S. Treasury Secretary Timothy Geithner of having «a lack of amazing to knowledge», especially the Democrats and Republicans were reached before the downgrade and after weeks of give and take, to mechanism prevented the federal government to stop the payment of dues. The Agency responded that the United States, despite the agreement on the mechanism, has not taken adequate measures to curb the rapidly growing debt.
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