Blumenthal does something right

Walt sent a link to this story about our state Attorney General and it seems only fair, after the scorn I heap on the man, to acknowledge when he gets on the right side of something and in fact leads the way. Blumenthal assails TARP money going to the Big Three rating agencies that created toxic loans. Standard & Poor’s and Moody’s and Fitch took huge fees to “rate” the junk being peddled by their clients and classified them as Triple A low risk when they knew damn well they were crap. Without those ratings, the entire scheme wouldn’t have worked. So good for you, Mr. Bluementhal.

“This potential $400 million windfall overpays the Big Three raters and undercuts competitors — another money reward for failure,” Blumenthal said in a news release. “The same Big Three that overrated bonds now regarded as toxic assets will be rating new bonds issued to restart lending and solve the economic crisis they helped create.”

The program, created by the Federal Reserve and the Treasury Department, is called the Term Asset-Backed Securities Loan Facility.

It provides loans to big investors and companies to buy newly issued securities backed by consumer debt, stimulating lending for auto, education, credit card and other loans.

The program starts by providing up to $200 billion in financing to investors, such as hedge funds, private equity funds and mutual funds, to buy up the debt. It has the potential to generate up to $1 trillion in lending.

Calls were placed Monday to Moody’s, Fitch and Standard & Poor’s seeking comment.

Blumenthal has written to Federal Reserve Chairman Ben Bernanke asking him to revise the program. He ways the program gives the three rating agencies an advantage and assures that their six smaller competitors can’t compete for the work.

As part of his antitrust inquiry, Blumenthal has subpoenaed Moody’s, Fitch and Standard & Poor’s for all documents and information.

The attorney general says the three agencies overrated bonds now regarded as toxic assets and say they will be rating new bonds issued to restart lending and solve the economic crisis they helped create.


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2 responses to “Blumenthal does something right

  1. Walt

    Chris, Chris, Chris;
    Thanks for the kind words. But I am more than capable of handling “the scorn you heap” upon me. You are lucky I like you, my friend.
    Quite honestly, I have been retorting with one hand tied behind my back!! And cutting you plenty of slack. I don’t want to be accused of really pulling the reigh…. of really pulling you up short.
    So fire away my friend!!
    Oh…. you were refering to Blumie???
    OOOPPPSSS!!! Nevermind.
    Gotta WORM!!
    Your Pal,

  2. John

    I agree with your assesment of the odious Mr. B but I have to admit he got it right this time. No job offers from the White House will be forthcoming I’ll bet.