As Egan-Jones says,the downgrade should be a "big heads up for Money Market Funds." Not to worry, we are confident that two years after the Reserve fund broke the buck, financial regulation has moved far enough to contain any potential fall out from massive redemptions. Right. Right?
Here is the history of recent rating events from Egan-Jones:
- On 4.29.10 we issued a BP rating as AA with negative outlook.
- On 5. 20.10 we lowered BP from AA to A+ with negative outlook. Two rating grades lower than S&P.
- Today: 6.3.10 we downgraded BP again from A+ to BBB+ with negative outlook. 4 rating grades lower than S&P.
Unlike the clowns at the legacy rating agencies, many hedge funds actually trade on Egan-Jones recommendations. This will destroy JPMorgan's attempts at lobbying for a high BP price so the firm can sell off its residual prop exposure.