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March 13, 2009
Rating agencies weren't all wrong
In Berkshire's Welcome Downgrade, Felix mentions that Berkshire Hathaway is joining GE (who fell off yesterday) in falling off the list of corporate credits with AAA ratings. AIG fell off in 2005. I think that leaves only four companies (American Data Processing, Johnson & Johnson, Exxon Mobil and Toyota) with a AAA rating
One of the success stories in the world of private regulation is the rating agency. Yes, I know they really messed up ratings on the mortgage backed assets. I mean specifically on corporate bonds. There were something like 40 AAA credits in the early 1980s. Firms then really did depend less on financing and leverage then they do today. Corporate credits are more dangerous. The credit ratings reflected that. Maybe not enough, but they were telling us things got more dangerous.
Posted by OneEyedMan at March 13, 2009 9:21 AM
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