S&P To Congress: Hands Off Our Cookie Jar
Standard & Poor's fired a shot across the bow of congress with this statement. "'We are reaffirming the criteria that supports the 'AAA' ratings on the housing GSEs, given the proposed legislation that we have seen thus far,'said Victoria Wagner of the S&P."
"The ratings currently incorporate both the financial assessment and public policy role of the GSEs. 'Implied guarantee'means something in the capital markets,' explained Michael DeStefano, chief quality officer for Financial Institutions Ratings at Standard & Poor's."
The S&P is obviously saying that should congress stop the guarantee, the GSE's will lose their rating and the mortgage scheme will collapse. Nothing new to this blog, but interesting that the ratings firm took this position when nobody knows what the legislation will look like. I expect they are trying to influence those writing the policy.