Bond Sale? Don’t Quote Us, Request Credit Firms – Anusha Shrivastava, The Wall Street Journal
“Standard & Poor’s, Moody’s Investors Service and Fitch Ratings are all refusing to allow their ratings to be used in documentation for new bond sales…Each says it fears being exposed to new legal liability created by the landmark Dodd-Frank financial reform law…The new law will make ratings firms liable for the quality of their ratings decisions, effective immediately…That is important because some bonds, notably those that are made up of consumer loans, are required by law to include ratings in their official documentation.”
IMF Shifts Advice to Banks on Asset Bubbles – Bob Davis and Tom Barkley, The Wall Street Journal
“The International Monetary Fund’s executive board said central banks may want to use interest rates in a “limited” way the next time they encounter an asset bubble that needs to be pricked…”the combination of rising asset prices and rapid credit growth may warrant a higher policy rate,” the IMF paper said…Some Fed researchers say that loose monetary policy can play a role in promoting asset bubbles by encouraging banks to take on too much leverage and that small changes in interest rates could help tame bubbles.”
