I noticed in a recent poll that Obama is favored over McCain to win the election.
I decided to investigate what Obama's America might look like. One bullet I noticed was Obama's reaction to the credit crisis. Specifically, Obama vows to investigate how Moody's along with Standard & Poor's are paid by issuers of securities to make decisions on the stabilility and sentiment of credit ratings. Fitch, although guilty by association, saved some face by standing up to MBIA. The worst-case scenario is to regulate with limits on revenues generated, or other incentives credit ratings firms receive from banks, public finance, and sovereigns for the credit ratings services they purvey.
Improve Transparency in the Market <o:p> </o:p>
Investigate Potential Conflict of Interest between Credit Rating Agencies and Financial Institutions: <o:p> </o:p>
Credit agencies are paid by the issuers of securities, not by the buyers of securities, which creates a potential conflict of interest in favor of issuing strong securities ratings. This problem was illustrated in the subprime market crisis in which credit rating agencies strongly rated subprime mortgage securities even as there were significant indications of large numbers of foreclosures and a weakening housing market. Barack Obama supports an immediate investigation into the ratings agencies and their relationships to securities’ issuers, similar to the investigation the EU has recently announced. <o:p> </o:p>
$37.6 (04/19/08)
