The new financial regulation bill (FINREG) authored by Sens. Frank and Dodd is causing turmoil in the bond market because bond rating services Moody's, Standard & Poor's and Fitcch Ratings fear legal liabilities due to the FINREG bill.
Ford Motor Co. had to quit plans to issue new bonds to finance business as one of the first effects of the bill with many more bad effects probably to come. How bad is this going to get? No one knows and the markets will not like this uncertainty!
The rating agencies say that according to the new bill they can be held legally responsible for their ratings. In other words they can be sued big time if even just one of their ratings turns out to be wrong. Who would want to do business under these circumstances?
So who, pray tell, is going to rate new bonds now? Well, obviously it will have to be the government, probably the SEC or one of the other agencies. So even more power will be in the hands of the government. This power could be abused. The government can rate a certain privately issued bond low so that the company would not be able to sell bonds. This could lead to its ruin just because some government hack does not like them or even because he has a secret conflict of interest in the deal.
How much more of this liberal socialist legislation do we have to put up with before we act like Americans and tell these Congressmen in no uncertain terms that we don't like their work in Congress and we are going to remember it when November elections come around. Both Democrats and Republicans are at fault here so lets rattle their cages. Call and write letters today!
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