I ended my long piece on the mortgage credit sausage machine by suggesting that the real trouble would start when the ratings agencies start to downgrade the more highly-rated mortgage-backed structured products. Without such sterling ratings on these newfangled credit instruments, the funding from respectable institutions would start to dry up.
It seems that there may just have been a step in that very direction.
S&P, one of the three credit ratings agencies, announced that it is heavily revising its methodology for rating mortgage-backed securites (MBSs), reviewing previously rated MBSs, and downgrading a mess of them right off the bat. It will also be reviewing previously rated CDOs that consist of sliced-and-diced MBSs.
read more at voiceofsandiego.org
July 11, 2007 @ 11:18 PM
Michelle Steffes
As an
Michelle Steffes
As an questioner posed to the rating agencies. Why has it taken so long for them to downgrade these securities? Did they not know of the abuses in the sub-prime market? No docs, stated income. Oh yeah, I can afford this mortgage, believe me! One should question all of there ratings.