Why should they play such an important role after helping to create the largest financial debacle in history?
Scare tactics is my answer….
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I think ratings agencies are in a pretty bad position right now. Yes, they screwed up in the past, but things are also pretty bad right now. On one hand they have to do something to justify their existence, but on the other you have folks over in Europe saying they will ignore any rating agency declaring a technical default until all three majors confirm it.
Due to the powers that be and peoples memory of the previous crash, I don’t think they want to be the ones to pull the plug. But, they can’t just sit idly by and do nothing.
I agree that it seems silly for them to be the voice of reason after such an epic failure on their part just a few years ago, but who else is out there?
@ leftcoasttrader,
if they need to brush up their image then they need to get real and call a spade a spade.
The U.S. should be downgraded like any other country given our debt crisis and spending problems.
Instead they play games with scary titles of downgrades and then say everything is kosher after the debt ceiling deal.
IMO they are a waste of space.
I get that, but there are too many people out there that think they screwed up so bad in 08 that they deserve to be in the penalty box for 5+ years. If they actually do something, people will just say “why should we care now when you didn’t do anything last time?” A downgrade may pull the plug and how could they do that when the only thing worse than market sentiment is sentiment towards ratings agencies. So, we’re left with this wishy washy nothingness.
They’re walking the line of not wanting to do too much due to their incompetence last time and not wanting to screw the pooch again.
@leftcoasttrader,
all true, but its time to get a backbone and stand for what they were meant to do.
They are no better than Jack Grubman, Mary Meeker et.al. during the boom years. Did they ever regain their prominence?
They are no better than consumer credit agencies, Experian, Trans, etc…A small monopoly that would serve the public well to allow competition.
Bernake does not consult the dopes at Moody’s. Nor should he.