Warren Buffett testified yesterday before the Financial Crisis Inquiry Commission along with Moody’s Chairman and CEO Raymond McDaniel. The purpose of the hearing was to probe the failure of the rating agencies to accurately rate securities associated with subprime housing loans during the real estate bubble. Was he too easy on Moody’s? Read this article for one opinion.
Standard & Poor’s has downgraded its long-term counterparty credit rating on Berkshire Hathaway to AA+ from AAA. The action also lowered the financial strength rating on Berkshire’s insurance operations to AA+. The ratings were removed from Standard & Poor’s credit watch and now have a stable outlook. Standard & Poor’s action comes only weeks before Berkshire Hathaway is set to release results for 2009 which will almost certainly indicate thatbook value ended the year at a record high. Read this article for more details.
Those who followed politics in the early 1990s will recall the impact that “bond market vigilantes” had on the Clinton Administration’s fiscal policies. Will credit rating agencies replace the bond market as a form of fiscal discipline in the years to come? Read this article for more information.