On Apr 29, 2010, at 9:48 AM, Stephen Russell wrote:
> The people who were purchasing these bonds did their research or did
> they just get the insurance on top of the bond? Did they accept the
> FALSE rating of the bond and not do their homework?
This is ridiculous. The whole purpose of rating agencies is to enable
investors to do their homework. If you considered buying a bond, and that bond
was AAA rated, you should expect extremely little risk, along with a lower rate
of return. bonds with lower ratings had higher risk and a concomitant higher
rate.
No one outside of the bond issuers knew that the rating was false at
the time, and it is disingenuous to take a superior tone towards people who
accepted the rating agencies' judgments. It's as if a food company falsely
labeled a box of poison as containing nothing but wholesome ingredients: you'd
probably sneer at the "losers" who read the ingredients and made their purchase
based on that as "not doing their homework".
-- Ed Leafe
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