European Banks Preparing To Boycott Big Three Rating Agencies

Tyler Durden's picture




 

We were wondering how long Europe's insolvent, and very much scorned, banks would take the constant downgrade abuse (or reacquaintance with reality as we like to call it, but that is irrelevant) by the rating agencies without retorting. After all the same organizations that allowed bank "credit analysts" to pretend they did work for years, when they all merely fell in place in some lemming-like procession, patting each other on the back, pocketing record bonus after record bonus and praising groupthink encapsulated by the made up letters AAA, are now largely non-grata first in Europe, and soon, following the imminent downgrade of American banks, in the US as well. It appears that the response is finally coming. Sky News reports that "some of Europe's largest banks are intensifying discussions about a move to reduce their co-operation with the big three credit ratings agencies amid widespread dissatisfaction with their decision-making." After all, when all they do is downgrade, as opposed to the old standby, upgrade, who needs them. In fact, why not just shut their mouths entirely. Sadly, this is precisely what is on the horizon.

From Sky News:

I have learned that finance directors and other executives from about a dozen of the Continent's biggest lenders held talks on the issue during the Institute of International Finance in Copenhagen last week.

 

I'm told that the discussions did not result in a formal decision to reduce the amount of information disclosed to Fitch, Moody's and Standard & Poor's, but one source familiar with the talks said today that "things are certainly moving in that direction".

 

The judgements of the dominant trio of ratings agencies have been questioned repeatedly as the Eurozone crisis has deepened, triggering downgrades of numerous European governments and major banks.

 

Moody's is expected to announce downgrades to the ratings of British banks including Barclays, Lloyds Banking Group and Royal Bank of Scotland in the next few days.

 

One senior bank executive put it like this to me: "The ratings agencies got it horribly wrong on the way up; there are lots of reasons to suppose they are getting it wrong on the way down."

They sure do: somehow they still rates banks in Europe higher than a D, when even blind chimps with typewriters would have no problem finding the correct key on the keyboard to describe the true solvency state of the continent's banking system.

In the meantime, the boycott of anyone who dares to write adversely of banks is coming. Because you see thair "assumptions" are wrong.

In an ideal world only banks, and specifically the same analysts who previously had relied solely on the rating agencies to do their work for them, should rate other banks. And the range of recommendations should range from Buy to Very Strong Buy only.

Anything below that should be forbidden by the respective constitution, of the US, and of the soon to be Federal German States of Europe next.

All of the above notwithstanding, the only real rating agency out there with some integrity was, is and will continue to be Egan-Jones. All else are merely fluffers for the largest paying client.

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Wed, 06/13/2012 - 14:10 | 2522547 disabledvet
disabledvet's picture

But they rated all that MBS as triple A, what's the problem?

Wed, 06/13/2012 - 14:21 | 2522605 CPL
CPL's picture

It's Wednesday?

 

So far that seems to be the only explanation.

Wed, 06/13/2012 - 14:27 | 2522640 ZerOhead
ZerOhead's picture

Only a terrorist would do something as heinous as downgrade.

And you know what we do to terrorists...

Wed, 06/13/2012 - 14:30 | 2522660 Michael
Michael's picture

That's OK, Zero Hedge and the internet blogs will rate the zombie banks with greatest accuracy anyway just like a free market should operate.

Wed, 06/13/2012 - 14:32 | 2522674 NotApplicable
NotApplicable's picture

Reggie better watch his back!

Wed, 06/13/2012 - 14:47 | 2522769 HoofHearted
HoofHearted's picture

Reggie is meaningless. Sean Egan better watch his back. And we'll be watching it too. Egan-Jones is the only rating agency with any credibility. And that's why the SEC is after them...

Wed, 06/13/2012 - 15:01 | 2522849 12ToothAssassin
12ToothAssassin's picture

"Fluffers" FTW

Wed, 06/13/2012 - 14:35 | 2522677 Troll Magnet
Troll Magnet's picture

Only a terrorist would do something as heinous as downgrade.

And you know what we do to terrorists...

 

We.........fund them through back channels?

Wed, 06/13/2012 - 14:30 | 2522665 AlaricBalth
AlaricBalth's picture

Freud would say that the leaders of Europe are attempting to overcome their feelings of powerlessness. Killing the messenger is a last, futile attempt at asserting their absolute power.

Wed, 06/13/2012 - 14:33 | 2522679 NotApplicable
NotApplicable's picture

Off with their head!

Wed, 06/13/2012 - 14:49 | 2522786 kito
kito's picture

headline: eurpoean populace preparing to boycott banks.....

Wed, 06/13/2012 - 14:24 | 2522629 Pladizow
Pladizow's picture

"Money power denounces, as public enemies, all who question it's methods or throw light upon its crimes." - Jennings Bryan

Wed, 06/13/2012 - 14:43 | 2522738 riley martini
riley martini's picture

 No honor among thives. The banks co-fraudsters rating agencies waited until even the dullest obsever could see anything above junk was just another fraud.

Wed, 06/13/2012 - 14:11 | 2522549 GeneMarchbanks
GeneMarchbanks's picture

'All else are merely fluffers for the largest paying client.'

Zandi is Most Valuable Fluffer for 2012.

Wed, 06/13/2012 - 14:26 | 2522643 Pladizow
Pladizow's picture

Cramer for the decade!

Wed, 06/13/2012 - 14:13 | 2522558 timbo_em
timbo_em's picture

Since Lebanese girls became the new half-asians will BB+ become the new AAA?

Wed, 06/13/2012 - 14:13 | 2522559 asteroids
asteroids's picture

The truth hurts eh?

Wed, 06/13/2012 - 14:17 | 2522566 GeneMarchbanks
GeneMarchbanks's picture

It sure does, especially when AAA rated poop in a box blows up in your face.

Wed, 06/13/2012 - 14:32 | 2522659 ZerOhead
ZerOhead's picture

My blind chimp Bobo with hairy palms that Michael Jackson gave me just typed 'XXX'.

Wed, 06/13/2012 - 14:33 | 2522688 NotApplicable
NotApplicable's picture

TMI!!!

Wed, 06/13/2012 - 14:36 | 2522700 Mark123
Mark123's picture

Well done Bobo! 

 

Give Bob a big bonus this year so he can buy a place in the Hamtpons.  He can hang out with the other wall street crooks and fling his shit around with the best of them.

Wed, 06/13/2012 - 14:15 | 2522561 john_connor
john_connor's picture

They don't want a rating when it no longer suits them.  Can we go below zero credibility?

Wed, 06/13/2012 - 14:26 | 2522637 Spitzer
Spitzer's picture

why wouldnt they ?

Ratings agencies represent the print zone. Not the Eurozone. US downgrade not withstanding

Wed, 06/13/2012 - 14:35 | 2522693 NotApplicable
NotApplicable's picture

They'll just solve it with more socialism, duh.

"The Ministry of Financial Truth," coming soon to a dictatorship near you.

Wed, 06/13/2012 - 14:15 | 2522563 Essential Nexus
Essential Nexus's picture

Could the big three ratings agencies countinue their downgrades for free as punishment for the boycott?

Wed, 06/13/2012 - 14:37 | 2522708 NotApplicable
NotApplicable's picture

Without adequate info, they'd be exposing themselves to all those slander/libel/butthurt suits the kangaroo courtesans are so fond of.

Wed, 06/13/2012 - 14:15 | 2522564 Gene Parmesan
Gene Parmesan's picture

Amazing. Can you imagine their reaction if the agencies had actually done their jobs?

Wed, 06/13/2012 - 14:16 | 2522571 ragequit
ragequit's picture

whats the timeline for american banks copying them?

Wed, 06/13/2012 - 14:46 | 2522759 riley martini
riley martini's picture

The American banksters own them.

Wed, 06/13/2012 - 14:50 | 2522790 NotApplicable
NotApplicable's picture

Honestly, I don't think nationalist labels apply to them, as they're "bigger" than that.

Wed, 06/13/2012 - 15:02 | 2522853 earleflorida
earleflorida's picture

there is no time line, it's just an infinite elliptical loop that breaks periodically for loop-hole adjunct adjustment, making the revolve-lution obtuse to the human psyche --- the tried and true Serta lexicon for counting sheep while you sleep... ? 

FED  subliminal pillow talk for insomniacs. 

Wed, 06/13/2012 - 14:16 | 2522572 MaggieL
MaggieL's picture

I'd be more upset as a ratings agency if a boycott was announced by customers who actually had money. 

Wed, 06/13/2012 - 14:16 | 2522574 levelworm
levelworm's picture

And Egan-Jones is "super-independent"? Come on, don't be so naive.

Wed, 06/13/2012 - 14:20 | 2522601 homersimpson
homersimpson's picture

No one's perfect.. but I'll take an Egan-Jones rating anyday over the big ugly 3.

Wed, 06/13/2012 - 14:48 | 2522781 riley martini
riley martini's picture

 Maybe Eagan Jones isn't independent but they are about two years a head of the fascist controlled agencies.

Wed, 06/13/2012 - 14:17 | 2522576 Ted Baker
Ted Baker's picture

SHOULD WE ASK THE YANKEES WHO CREATED THESE AGENCIES IN THE FIRST PLACE AND WHAT WERE THEIR INTENTIONS WITH SUCH THING?

Wed, 06/13/2012 - 14:28 | 2522649 CommunityStandard
CommunityStandard's picture

Excuse me sir, but your caps lock appears to be stuck.

Wed, 06/13/2012 - 14:33 | 2522684 Mark123
Mark123's picture

best response today!!  Still wiping the coffee from my keyboard....

 

 

Wed, 06/13/2012 - 14:49 | 2522780 akak
akak's picture

Obviously, the poster in question is an advocate of the Inverse Rooseveltian Motto: "Speak Loudly and Carry a Small Stick".

Wed, 06/13/2012 - 14:18 | 2522579 junkyardjack
junkyardjack's picture

Rating agencies getting no love

http://www.youtube.com/watch?v=egrgy2a0cvo

Wed, 06/13/2012 - 14:51 | 2522802 NotApplicable
NotApplicable's picture

You know, now that Fiddy and Oprah have made up, all is right with the world.

Wed, 06/13/2012 - 15:07 | 2522880 earleflorida
earleflorida's picture

no love for you !

Wed, 06/13/2012 - 14:17 | 2522580 debtor of last ...
debtor of last resort's picture

No sir, you don't have cancer. Here, have an aspirine.

Wed, 06/13/2012 - 14:19 | 2522582 Dead Canary
Dead Canary's picture

The new ratings:

 

AAA

BBB

MIC

KEY

MOU

SE

Wed, 06/13/2012 - 14:23 | 2522586 Pancho Villa
Pancho Villa's picture

The truth hurts!

Not that the ratings agencies are actually telling the truth yet. Their rating are far too optimistic. But a tiny amount of truth is starting to creep into some of the ratings.

If the ratings agencies were rating the health of Francisco Franco, they would probably rate his condition as 'serious'.

Wed, 06/13/2012 - 14:20 | 2522598 lolmao500
lolmao500's picture

Why don't do they do like America and coerce them into putting puppets in like the US did with S&P after they downgraded the US? Not to mention the SEC suing Egan Jones... Funny that it's the US using mafia tactics, not Europe...

Wed, 06/13/2012 - 14:22 | 2522616 11th_hour
11th_hour's picture

Because they do not like their dirty laundry being aired in public....the curtain of secrecy will be closed.  No more internal information being audited by the rating agencies. 

They feel like it's now time to follow good advice.  "Better to be thought a fool rather than open your mouth and be proven to be one". 

This is not a good sign. 

Wed, 06/13/2012 - 14:23 | 2522619 magpie
magpie's picture

Too bad. Would have been nice to see the ESM have AAA, for a week or so.

Wed, 06/13/2012 - 15:29 | 2523004 slewie the pi-rat
slewie the pi-rat's picture

Hahaha!

if you enjoyed nigel, check this out >---> Saving the Euro axelM

doya think they go so fas as allowing traders to short the ratings companies' and the parent companies' stocks?  L0L!!!

moody's, wholly-owned by warrenB can be shorted thru it's appropriate current  berkshireH holding scheme and maybe shorting g/sachs just as a side dish too? 

this is war?  more jello!  togaParty tonight!  double-secret ratings for sale!  will trade for deviant sex!  and digital money!  bigger bathtubs!  clothing optional!  code 10!

Wed, 06/13/2012 - 14:24 | 2522624 Pairadimes
Pairadimes's picture

Yep. This is one of the milestones on the way to fiscal stewardship hell. We are actually a little ahead of schedule.

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