Founded 99 years ago, Moody’s Investors Service claims it “is among the world’s most respected and widely utilized sources for credit ratings, research and risk analysis.”
Standard & Poor’s traces its origins to the 1860 publication of Henry Varnum Poor’s History of Railroads and Canals in the United States, a precursor of modern stock reporting and analysis. S&P claims it ” is the world’s foremost provider of independent credit ratings, indices, risk evaluation, investment research, data, and valuations.”
For a century or more these two icons of the securities industry were respected as the gold standard for credit standards. Sadly, each has recently become just another Wall Street prostitude, peddling its opinions to anyone willing to pay them. Move over defrocked analysts Jack Grubman and Mary Meeker. Apparently, “POS” and “AAA” have much the same meaning when it comes to rating agencies.
Thirty-eight years ago a young banker in Houston became an investment banker building bond portfolios for banks and other institutions. “Investment quality” securities were required for the portfolio of most of these institutions. This was literally defined as either Baa, or higher, by Moodys or BBB, or higher, by Standard and Poors, these were the “gold standards” used when working with my clients. Today, such gold is tarnished and even questionable as to its authenticity.
Millions of investors have recently been harmed by the fall in prices of mortgage backed bonds and other obligations. Some of the losses was caused by poor credit risks. Yet, many investors who had purchased the securities, and even those who had sold these to them, were misled by the rating agencys who had given overly-inflated ratings to many of the instruments.
Moreover, the market for most mortgage-backed securities have suffered in recent months, as have other debt securities. A major reason for the fall of even sound securities has been that those who previously relied on credit rating agencies Moody’s and Standard and Poor’s had been betrayed. Credit these credit agenies for selling their souls to the highest bidders. A pox on both your houses.
Shepherd Smith and Edwards represents investors nationwide in claims against members of the securities industry. We have represented investors in more than 1,000 securities cases, including concerning mortgage backed securities. To learn whether we might assist you with a claim contact us to arrange a free consultation with one of our attorneys.