RobertB
February 6th, 2008, 05:43 PM
Now They Tell Us
Matthew Craft 02.11.08, 12:00 AM ET
Moody's says it's hard to evaluate the risk in complex mortgage securities
It's well known that debt rating agencies like Moody's (nyse: MCO - news - people ) Investors Service and Standard & Poor's underestimated the trouble brewing in subprime mortgages, awarding top marks to securities now creeping close to default. But now Moody's has released a report conceding that rating agencies weren't up to the task. Any expectation it could fully uncover risk in the maze of complex financial instruments was, it says, "somewhat unrealistic."
"Risk traceability has declined probably forever," the report says. "It is extremely unlikely that in today's markets we will ever know on a timely basis where every risk lies."
http://www.forbes.com/home/wallstreet/forbes/2008/0211/040b.html
Matthew Craft 02.11.08, 12:00 AM ET
Moody's says it's hard to evaluate the risk in complex mortgage securities
It's well known that debt rating agencies like Moody's (nyse: MCO - news - people ) Investors Service and Standard & Poor's underestimated the trouble brewing in subprime mortgages, awarding top marks to securities now creeping close to default. But now Moody's has released a report conceding that rating agencies weren't up to the task. Any expectation it could fully uncover risk in the maze of complex financial instruments was, it says, "somewhat unrealistic."
"Risk traceability has declined probably forever," the report says. "It is extremely unlikely that in today's markets we will ever know on a timely basis where every risk lies."
http://www.forbes.com/home/wallstreet/forbes/2008/0211/040b.html