While defending the rating agencies last week before the Financial Crisis Inquiry Commission, Warren Buffett also admitted, "I don't need them." It seems that more and more, the financial markets are coming to agree with Buffett's stance on ratings.
Before the Financial Crisis Inquiry Commission, The World's Greatest Investor essentially said this: We are all of us, myself included, a bunch of junkies -- and history shows that markets will always oblige us with a fix.
The price that the largest U.S. banks pay to borrow money is set to skyrocket -- and that's just the beginning of the sector's growing problems, which could put a big crimp in their profits.
The massive financial reform legislation now winding around Capitol Hill promises to seriously rearrange the rating agencies' formerly cozy and profitable business. Here's a look at what's coming.
Lawmakers' decision to restrict financial institutions' ability to select a credit-rating agency to evaluate their bonds may open the market -- and S&P, Moody's and Fitch -- to competition.
The settlement everybody has been banking on still isn't a done deal, leaving investors with reason to be concerned that Dubai World's massive debt won't be repaid in a timely fashion. It has also led S&P to cut DP World's credit rating. The trouble isn't over yet.
Morningstar's $52 million purchase of Realpoint, which provides ratings on commercial mortgage-backed securities, could give Morningstar solid enough footing to compete with established credit-rating leaders Moody's, Standard & Poor's and Fitch Ratings.
They got a lift just yesterday, when Moody's warned that the the U.S. and Britain are "substantially" closer to losing their triple-A ratings. But too bad for them, it won't come to that. They'll just have to keep watching the Hollywood version of Armageddon, 2012.
U.S. Treasury Secretary Timothy Geithner says the U.S. government "will never" lose its sterling credit rating despite big budget deficits and a newly increased debt limit that now tops $14 trillion.
