Wednesday, April 20, 2011

One day during an S&P ratings exam

One day during an S&P officer ratings exam

Q:
What do you rate the senior tranche of an issue 100% composed of subprime loans?

S&P:
AAA

Q: What do you rate the senior tranche of a resecuritization of the mezzanine tranche of a subprime issue?

S&P:
AAA

Q: What do you rate an insurer with a sizeable holding of CDS to subprime issues?

S&P
: AAA

Q: What do you rate a sovereign country that issues the global default currency, and has 100% of its debt in its own currency?

S&P: Uhm……A-?

We got potential here...

2 comments:

Detroit Dan said...

Ha! That nails it...

Green Trivial said...

Haha, good one!

S&P didn`t even have the guts to issue a full downgrade. They`ve just put US on a watchlist.

Goes to show these rating agencies are just power tools in the hands of big market manipulators.