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RealPoint's Borderline Criminal Disclosure Of Truth Deserves A Spanking
Frequent Zero Hedge readers are aware of our fascination by the ethically pure and intellectually honest legacy rating agencies (read S&P and Moody's), whose primary goal in life is to provide readers of its reports with unconflicted, unbiased research, without regard for the top and bottom line of key Wall Street firms, which purely by accident happen to be the biggest sources of revenue to these same NRSRO via structured products which are spun off from the banks' balance sheets and sold to highly sophisticated, erudite yet unfortunately bankrupt island nations (which luckily have a monopoly on geysers and 6 foot tall women to feed their GDP). The complete transparency that shrouds the work of these rating agencies, and the integrity of its professionals is beyond reproach, and where, contrary to litigation disclosure, the phrase "let's hope we are all wealthy and retired by the time this house of cards falters", was massively taken out of context and was simply referring to an intern's attempt at recreating the Sistine Chapel using nothing but 10 decks of Bicycle cards.
Which is why we read with dread and horror the following press release from RealPoint, which has the dubious distinction and being one of the few NRSROs that provide abhorrently objective and distressingly unbiased analysis on all matters structured.
Yesterday's SEC action, granting Nationally Recognized Statistical Rating Organizations (NRSROs) with access to the necessary underlying data that will allow competing credit rating agencies to offer unsolicited ratings for structured finance products, is one of the most important reforms undertaken by the government in response to the role of the major credit rating agencies in the credit crisis.
This development will increase competition in the highly-concentrated credit ratings industry because the offering information on all structured finance products will be required to be distributed on a presale basis to all NRSROs. Thus far, only the rating agencies selected by the issuers of the securities received the data on a presale basis, thus shutting out other NRSROs from providing any type of presale analysis. The proposed changes regarding improved access to information will also allow NRSROs to conduct better surveillance of structured finance products on an on-going basis.
"This change will provide more choices for investors, who will now be able to choose an agency based on the quality and transparency of its ratings and analysis," said Robert G. Dobilas, CEO and President of Realpoint. Realpoint's revenues are derived primarily from investors who subscribe to Realpoint's credit analytics service, which provides investors with monthly ratings updates and comprehensive credit reports on all current CMBS transactions.
"With more ratings agencies analyzing the creditworthiness of these securities, there will be less ambiguity and less chance for some to take advantage of the system. Ultimately, investors will be provided with a better understanding of the risk profile of structured finance investments," added Mr. Dobilas.
We, as well as all of you, dear readers, should be fully aware by now, that the respected former Fed Chairman Greenspan was never singlehandedly responsible for, and the rating agencies had no involvement in, creating what some fringe, tin-hat bloggers call a Ponzi market manifesting in such spurious phenomena as credit and housing bubbles. Neither is his successor, who prudently and presciently called the economy's endless upward trajectory repeatedly, currently engaged in recreating just this presumably dubious arrangement, and whose actions day after day simply conform with what is in the US economy's best interest: namely a strong dollar, a vibrant middle class, and balance sheet transparency where such things as SIVs and off balance sheet items are not even defined in the Oxford English Dictionary. Which is why Zero Hedge looks with great skepticism on any attempts by the likes of grossly competent RealPoint to highlight what may be some justification of the repeated lies by alternatives of the one true source of objective, raw and unregurgitated primary data and spot on economic analysis, known as CNBC. After all, rating agencies have never had a monopoly in what has been fraudulently claimed as repeated information manipulation. And even if they did, the even more objective, unbiased and thoroughly unrelated to Wall Street professionals working for the Securities and Exchange Commission, would never have allowed such a purported travesty to occur in the first place. Lest it be forgotten, the mission of the U.S. Securities and Exchange Commission is to
protect investors; maintain fair, orderly and efficient markets; and
facilitate capital formation. In fact, the watchdog agency refers to itself as
"the investor's advocate." One can not honestly believe that such enlightened words could have even an iota of hypocrisy in them.
Which is why we say, boycott RealPoint, boycott their products, when you see them coming, cross the street and snub your noses in their general direction. Their vague attempts to undermine what is, at its core and periphery, a fair, efficient, and well-regulated system will fail, for ever and ever, with the blessings of the greatest organizations ever to grace the face of the planet: the Federal Reserve and Goldman Sachs.
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OT but too funny.
Carbon offset kiosk at SFO sells carbon credits at 60 times the market rate
http://wattsupwiththat.com/2009/09/18/carbon-offset-kiosk-at-sfo-sells-carbon-credits-at-60-times-the-market-rate/
This is much better than the put a quarter in the cuss jar it replaces. It's more modener.
The problem is more fundamental than just "openness" and "access to information" -- the problem is one of complexity.
The assessment of risk for complex securities hasn't just been fraudulent -- it has been well nigh impossible. What we need is not just a ratings system which attempts to accurately identify risk -- but a system which rates the confidence with which these ratings can be given at all.
..how about banning of 'complex' securititties outright?
Or if that is too fascistic, if one needs a Yale lawyer or Doctorate in Astrophysics to understand them, then perhaps that is an indication to the buyer that they are being screwed from behind and thusly to be avoided with great prejudice?
I thought NRSRO stood for Not Really Self-Regulatory Organizations.
This unrelated case should have interesting ramifications for the Sergey Aleynikov case.
"An appeals court has ruled that a former employee who took company data with him for his own business did not violate the Computer Fraud and Abuse Act, despite his unethical actions. This outcome pits the court against itself as to whether disloyal computer use counts as unauthorized access."
http://arstechnica.com/tech-policy/news/2009/09/disloyal-employees-are-n...
fyi CNBC canceled Dennis Kneales' ignorant, asanine show.
I'm hearing internet chatter on Deutsche Bank problems, 5000 euro withdrawl limits, hedge fund shorintg...
Anyone hearing anything?
Is this the same chatter that promised BMO was going down a month ago?
Don't think so. I only screen credible chatter ;).
where are you seeing this ?
From Washington Blog:
"One of the untold scandals of this country is that our museums are stuffed with fake old masters because the people who authenticated paintings for the Mellons and Morgans of this world were paid a percentage of the price for the authentication. If they said it was no good, they got a few hundred bucks. If they said it was great, they got $100,000. Same story in the credit-rating organizations".
I had to look twice to the URL as I thought I was reading a story from the Onion, but no, this is reality!
Tyler,
I feel so rewarded each time i read your articles Tyler since you never mind telling the truth, and for that, I thank you eternally!!!!!
tyler
u are very smart
and a patriot
and very generous to run ZH for all of us
but a Strunk & White's Elements of Style or any other book on writing coherently would serve you well.
i email your stuff to friends and family when it is particularly good. but i hear back that your verbiage can distract attention from your message, especially since the topics covered are themselves quite sophisticated/complex.
Nothing like a nice dose of dry, verbose and intense sarcasm to balance a day of dealing with dummies...
I believe the style is intentional. Meaning no playing to the cheap seats, and no lazy bones.
Maybe tell your friends to work harder?
This is Tyler at the peak of his Jonathan Swift Meets the Internet mode. (Would we really want ZH writers to spend all morning polishing their lprose for posterity?) Many long-ball writers disdain, moreover, in the necessity and urgency of their oeuvre, lowering the level of inference, realizing readers will only get from the message what they can bring to it. Dostoevsky, Mann, Kafka, Bellow, Wittgenstein, Derrida come to mind. Cite Strunk & White to Joyce, okay. No pain, no gain.
governor moonbeam to the rescue
http://cbs5.com/local/credit.rating.agencies.2.1191422.html
Can someone explain who will make money off of this? Since every NRSRO will have access to the information, who is going to pay and who is going to sell the rating?
The credit rating units of Moodys, S&P, and Fitch stand to make much less in the future as the doors will slowly swing wide to competitive forces. Which was a crucial problem for years and prior investing collapses like Enron or Worldcom, to name a few.
Companies like Realpoint, Egan Jones, etc...stand to gain market share. Investors will be the ones, properly so, who can shop for services to rate any holdings.
No wonder Buffett was selling some Moodys last month..
That opening sentence was a two-breather, but oh so worth it as the rest of the post simply took the rest of my breath away.
6 foot tall women indeed - robo?!
Pete
2-3 years ago, I came across an article about DBRS trying to crack into the US market for becoming an NRSRO. Basically the gist of that article was "damn near impossible". DBRS wanted to play the game too, and occasionally their opinions would show on new-issue, non-agency MBS.
Maybe they wouldn't have done better, but a 4th contestant could have helped to flatten the field a little more...
The other 'Great Lie' perpetuated by S&P and Moody's - operatings earnings. Is the p/e 25 or 100. All those nasty non-recurring expenses - forget those. And next year - they're just one off expenses, no, that was an 'extraordinary item' or a 'one time adjustment'.
But i suggest you buy, buy, buy. A p/e of +100 provides a risk free entry point.
I am going back to read Ulysses because I can only comprehend Joyce's shorter sentences.
First a spanking, and after the spanking the oral sex
http://www.youtube.com/watch?v=DtcSYPjJbgg
Let me go back in there, and face the peril.
You missed your period (s).