Little rumor that the SEC “is giving asset-backed bond issuers a 6-month reprieve on quoting ratings, hoping to stem fears of another market freeze”. Fawn Johnson of Dow Jones, on Twitter, via a kind helper.
Update: Yup, it’s a blink. AP
H/t Mindrayge and others.
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Thanks, Richard. You’re all over this—yet another “quelle surprise!” post.
It matters not what rules the poor chickens make if you own the foxes ‘regulating’ the henhouse. It matters not what fraud laws the SEC is supposed to enforce even if you hand them a case on a platinum platter; it matters not what the Fed Reserve Charter says about who’s a bank and what securities it buys; it matters not what Federal Accounting Standards say about asset values; what the constitution says about war, habeus corpus, or surveillance; or for that matter, what Geneva Convention says about piracy, torture, or war crimes. When they own all branches of governement, there is not a law or regulation anywhere that matters to TPTB if it is not immediately convenient for their own self-serving purposes.
Six months? I wonder what could possibly be happening in the next 6 months–say in November, for the sake of argument–that would lead to such a seemingly arbitrary delay.
Daniel Wagner, AP Business Writer, On Thursday July 22, 2010, 4:45 pm EDT
WASHINGTON (AP) — Federal market regulators are relaxing a rule that could have clogged crucial markets for bonds backed by consumer debt.
The Securities and Exchange Commission says a credit rating agency’s signoff will not be needed for the sale of certain newly issued bonds. The change will last six months.
I guess when soundness of “markets” deteriorates to this point, “clog” becomes an economic technical term. “clog” the sewer lines seems like an approximate analogy.
Actually, it is a better blink than I thought it would be. From the initial news reports of this, I thought they had waived the liability requirement for the rating agencies. Instead, they have simply said that the ratings are unnecessary.
I assume this means that it is simply “buyer beware” where purchasers will need to do their own due diligence, kind of like if they were investing in risky assets instead of buying government-guaranteed sure things. It could be a daring experiment to see how a free market actually operates.
Er… ah.
Quoting ratings on new bonds, or existing bonds?
If the former, meh. If the latter, how is that not fraud? Don’t all sorts of funds and municipalities hold or sell bonds based on the ratings? Wtf?