As previously posted here, MBIA was the No. 1 Bond Insurance Company. Ambac Financial stood in at the No. 2 position. Until recently, perhaps. Their respective credit ratings have both been downgraded below the rating that has always been necessary in order to sell Bond Insurance. The developments are reported in several places including Reuters Report, "Moody's May Downgrade Ratings of MBIA and Ambac Units," p. C2, col. 1 (New York Times Nat'l Ed., Thursday, June 5, 2008), available online at www.nytimes.com; and Associated Press Report, "Stocks & Bonds/Investors Fret Over Financial Sector," p. C10, col. 4 (New York Times Nat'l Ed., Thursday, June 5, 2008), available online at www.nytimes.com.
In the meantime, three of the Credit Ratings Companies reportedly have reached or are negotiating a deal with the New York State Attorney General to change some of their business practices -- although not the source of their income, which when they began in that business was the person asking to find out a rating but now is, and would remain, instead the business that is being rated. The reported deal would also leave unchanged the opportunity for the business purchasing the services of a Credit Ratings Company to go to another Credit Rater if it did not like the rating, which it would not be compelled to disclose even as it shops for a better rating. See, for example, "Moody's, S&P and Fitch Agree to Deal on Fees," published on Friday, June 6, 2008 by the Los Angeles Times Online "From Times Wire Services", available online at www.latimes.com; Jenny Anderson & Vikas Bajaj, "Rating Firms Seem Near Legal Deal on Reforms," p. C1, col. 5 (New York Times Nat'l Ed., Wed., June 4, 2008), available online at www.nytimes.com.
"The deal with [the New York State Attorney General] applies only to debt backed by U.S. subprime and other so-called non-prime loans." "Moody's, S&P and Fitch Agree to Deal on Fees," supra.
As soon as the web log host, TypePad, provides again the opporunity to hyperllink directly to these sources, the author will try to make that happen but it is not possible to do so at the time of this post. Instead, the websites of the sources should work and for that reason are made available here in the interim.
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