Moody’s, S&P and the Great Credit Rating “Wimp Out”

The Wall Street Journal reports:

Maybe the consequences were intended. But we doubt it.
Just look at the stunning story in the WSJ by Anusha Shrivastava. She reports that the three biggest credit raters, Standard & Poor’s, Moody’s Investors Service and Fitch Ratings are refusing to allow their ratings to be used on new bond deals for fear of being exposed to legal liability via the just enacted financial-overhaul bill.

The raters still will offer to rate bonds, but won’t allow those ratings to be included in the public disclosure documents that typically accompany bond sales.

The articles notes one solution under discussion: That the raters would be willing to rate bond deals in private transactions, — meaning that the bonds are not registered witht he SEC or sold to the general public.