TakeAStepBack
Gold Member
- Mar 29, 2011
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Lets not forget how the ratings agencies rated the junk securities as AAA with absolutely no history to go on.
Yes, that's an intersting point. I think a few agencies found themselves more than a little humiliated by the collapse of some apparently solid banks.
They were drunk on federal govt. and federal reserve monetary policy. There was a belief the lender of last resort would cover the base if the risk proved too great. They were correct. Plus VaR by design created the grounds for excessive risk. It wasn't until it was too late that the realization came. That's when the bundling with other assets began to hedge and mitigate loss.