World
Bankers Brought Rating Agencies ‘To Their Knees’ On Tobacco Bonds

Wall Street pressed S&P, Moody’s and Fitch to assign more favorable credit ratings to their deals and bragged that the raters complied. Now many of the bonds are headed for default.

 

When the economy nosedived in 2008, it didn’t take long to find the crucial trigger. Wall Street banks had peddled billions of dollars in toxic securities after packing them with subprime mortgages that were sure to default.

 

Behind the bankers’ actions, however, stood a less-visible part of the finance industry that also came under fire. The big credit-rating firms – S&P, Moody’s and Fitch – routinely blessed the securities as safe investments. Two U.S. investigations found that raters compromised their independence under pressure from banks and the lure of profits, becoming, as the government’s official inquiry panel put it, “essential cogs in the wheel of financial destruction.”

 

Now there is evidence the raters also may have succumbed to pressure from the bankers in another area: The sale of billions of dollars in bonds by states and municipalities looking to quickly cash in on the massive 1998 legal settlement with Big Tobacco.

 

Read Full Story Here :

 

Courtesy : ProPublica.org

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Nifty, Sensex headed lower – Wednesday closing report
Nifty has some support at 8,120 but the overall trend is weak
 
In Tuesday’s closing report we mentioned that if the S&P CNX Nifty closes below 8,250, we may see some more weakness. Today the index opened marginally higher and hit the day’s high just 14 points above the opening. The move on the benchmark had no strength and it was pulled lower each time it tried reviving. Just before 3 pm, massive selling pulled the indices down sharply lower.
 
S&P BSE Sensex opened at 27,530 while Nifty opened at 8,272. The benchmark hit a high at 27,571 and 8,287. The indices headed lower to hit a four day low at 27,147 and 8,155. Sensex closed at 27,209 (down 298 points or 1.08%) while Nifty closed at 8,174 (down 93 points or 1.12%). NSE recorded huge volumes of 102.66 crore shares on account of expiry of futures & options (F&O) segment for December 2014. India VIX fell 1.49% to close at 15.0700. The stock market will remain closed on Thursday on account of Christmas.
 
The winter session of Parliament ended on Tuesday with the government unable to get key legislative reforms bills passed. However, today the Union Cabinet approved promulgation of the ordinance on the insurance bill, re-promulgation of the coal ordinance and allowing up to 100% FDI in medical devices in the pharmaceutical sector under the automatic route.
 
The Ministry of Finance today said that Prime Minister Narendra Modi will interact with bankers during the two day Bankers Retreat called ‘Gyan Sangam', to be held in Pune on 2nd and 3rd January, 2015 to prepare a blue print of reform action plan for banking sector. The objectives of this retreat are to create a platform for formal and informal discussions around the issues which are important for banking sector reform.
 
Jaiprakash Associates (8.96%) was the top gainer in ‘A’ group on the BSE. The stock hit its 52-week low on Tuesday. The stock was in the news as it signed a memorandum of understanding with UltraTech Cement wherein it will buy two cement plants of Jaiprakash Associates Madhya Pradesh.
 
Jet Airways (3.30%) was among the top three losers in the ‘A’ group on the BSE. It closed a landmark five-year syndicated loan in the Middle East region for USD 150 million. The transaction was fully subscribed to by banks spread across the Middle East region, from Dubai, Abu Dhabi, Bahrain and Doha-based financial institutions.
 
The only gainers in the Sensex 30 pack were Sesa Sterlite (0.59%), Tata Steel (0.06%) and ICICI Bank (0.03%).
 
BHEL (2.62%) was the top loser among Sensex 30 stocks. It was recently in the news as it bagged a Euro 16.96 million contract for a thermal power project in Turkey. It bagged a contract for rehabilitation of 3 units of electrostatic precipitators for the 430 MW Tuncbilek thermal power project in Turkey on EPC (Engineering, Procurement & Construction) basis.
 
On Tuesday US indices closed flat with a positive bias.
 
US economy grew at its quickest pace in more than a decade last quarter.
 
The final estimate of the US gross domestic product (GDP) for the third quarter was revised up to a 5% annual pace, its quickest in 11 years, from 3.9% reported last month, on stronger consumer and business spending, Commerce Department said in its third and final estimate Tuesday.
 
Consumer spending, which accounts for nearly two-thirds of the US economy, jumped to its largest gain in three months in November. Consumer spending rose 0.6% last month, while October was upwardly revised to a 0.3% increase, the Commerce Department said Tuesday.
 
Except for Shanghai Composite (1.98%) and SET Composite index of Thailand (0.40%) all the other Asian indices closed in the green. Nikkei 225 (1.24%) was the top gainer.
 
European indices were trading in the green. US Futures too were trading marginally higher.
 

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