Moneybox: Moody's Junkies

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moneybox Moody's Junkies If everyone hates the credit rating agencies, why won't anyone enforce the Dodd-Frank provision to dethrone them? By Bethany McLean Posted Tuesday, Aug. 2, 2011, at 11:07 AM ET Everyone hates the big credit rating agencies--Standard & Poor's, Moody's, and Fitch. Europeans resent the clout that they wield. Democrats hate them for their complicity in expanding the subprime mortgage market that brought down the economy and left us with a 9 percent unemployment rate. Republicans, though they're generally opposed to the Dodd-Frank financial reform legislation, have no love for the credit rating agencies, either. The conservative Wall Street Journal columnist Holman Jenkins, in a July 27 column headlined "Who Elected The Rating Agencies?," called section 939A of Dodd-Frank, which requires federal regulations to be stripped of all references to credit ratings, a "rare useful provision." Citing section 939A, David Zervos, the head of global fixed-income strategy at Jefferies, calls the noise the credit raters are currently making about downgrading U.S. Treasuries a "last gasp of hot air." Yet the stock performance of the rating agencies doesn't suggest that they're losing their relevance. Moody's stock is one of the best-performing for any big U.S. company this year. There may be a good reason. Last week, the House financial services committee held a hearing about the rating agencies. Much of it was devoted to the possibility that the agencies would downgrade the United States, but the various witnesses brought prepared statements about the progress of section 939A. After reading these, I'm not convinced that this important reform is going to happen. To continue reading, click here. Bethany McLean is a contributing editor at Vanity Fair and the co-author of All the Devils Are Here: The Hidden History of the Financial Crisis. Join the Fray: our reader discussion forum What did you think of this article? POST A MESSAGE | READ MESSAGES Also In Slate Senate Easily Passes Debt-Ceiling Bill. Look Who Voted Against It. Hitchens: What It Means That Turkey Has Pushed Out Its Top Generals Why Did Seven Heads of State Attend the Opening of This Shopping Mall ... in Kazakhstan?	Advertisement
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