First from the WSJ: New Rules Near on Credit-Ratings Firms
The rules, expected to be somewhat tougher than those proposed more than three years ago, will take additional steps to ensure that the firms’ interest in winning business doesn’t affect ratings analysis, said the people familiar with the process.
Credit raters have been lambasted by critics and lawmakers over their actions in the run-up to the 2008 financial crisis. A 2011 U.S. congressional report cited widespread and sudden downgrades of mortgage-related bonds as being perhaps “more than any other single event … the immediate trigger for the financial crisis.” The bonds had previously been given top-notch ratings by the firms.
The downgrades might have triggered the crisis, but the key problem wasn’t the downgrade – it was that the bonds were rated too high when first rated. I’ll review why this happened (ratings too high) again soon.
Friday:
• At 8:30 AM ET, the NY Fed Empire Manufacturing Survey for August. The consensus is for a reading of 20.0, down from 25.6 in July (above zero is expansion).
• Also at 8:30 AM, the Producer Price Index for July from the BLS. The consensus is for a 0.1% increase in prices.
• At 9:15 AM, the Fed will release Industrial Production and Capacity Utilization for July. The consensus is for a 0.3% increase in Industrial Production, and for Capacity Utilization to increase to 79.2%.
• At 9:55 AM, the Reuter’s/University of Michigan’s Consumer sentiment index (preliminary for August). The consensus is for a reading of 82.3, up from 81.8 in July.