Word: fitched
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...financial crisis would include credit-rating agencies - the companies that assign letter grades to everything from General Electric's bonds to Malaysia's sovereign debt, indicating the chances that investors will lose money. The CEOs of the three largest agencies - Moody's, Standard and Poor's and Fitch - were assailed by Congress in October for the way their firms made record profits while raising few, if any, red flags about how massively risky mortgage-related securities had become...
...and—most notably—the IMF have agreed to provide funding to avoid disaster. On Thursday, it was announced the country would receive over $25 billion of international bailout funds to last through the year. As David Hechlam, a director of the rating agency Fitch, commented: “They could probably get access to the markets, but the price they would have to pay would be very high”—given the situation, prohibitively high...
According to TIME calculations, U.S. banks hold $153 billion in residential mortgage bonds that used to have AAA ratings but have since been downgraded. The calculations are based on numbers from the International Monetary Fund, Fitch Ratings and New York University professor Nouriel Roubini. (Treasury and Federal Reserve officials declined to provide their estimates.) To get those selling, the Fed offers some attractive financing, but it hasn't made those details public and the financing is expected to be considerably less favorable than the FDIC rates. Treasury officials insist they have formulas worked out but are waiting to reveal details...
...ratings agencies themselves - Moody's, Standard & Poor's and Fitch - have nowhere to hide. Their CEOs took a royal lashing from Congress in October, and in April new regulations will go into effect, largely to address what is often painted as the Achilles heel of the ratings system: companies typically pay to have their own debt rated, therefore creating a massive conflict of interest for the ratings agencies, which want to hold onto that business. (See "How to Know When the Economy Is Turning Up".) Favorably rating structured finance products - including Frankenstein creations like synthetic collateralized debt obligations - became...
Poor's Publishing (later Standard & Poor's) started selling its bond ratings to investors in 1916; Fitch followed suit in 1924. In the 1930s, federal regulators began using these private ratings to evaluate the safety of banks' holdings, among other things, but the importance of the agencies waned following World War II as bond defaults became rare. The economic turbulence of the 1970s raised the industry's profile again. In 1975, the Securities and Exchange Commission (SEC) deemed certain firms "nationally recognized statistical ratings organizations"--making a sign-off from a ratings agency a necessity for anyone selling debt...