Ratings agencies can't win

Standard & Poor's, Moody's and Fitch have all been roundly criticized for their rosy ratings of mortgage-backed-related issues. They didn't start downgrading until it was way too late. Ever sensitive to the criticism, you can't blame them for considering methodology changes to commercial mortgage backed securities, which could result in downgrades of a large number of recent-vintage issues, notes Fortune.

The problem is that the move seems to run counter the Fed's TALF program, which has been expanded to cover highly rated CMBS. Fortune says a strong bond market rally has stalled since the S&P issued a call for comment. The fear is that a host of CMBS may no longer qualify for purchase with TALF-provided funds. Critics are puzzled by S&P's action. They argue that the agency hasn't articulated why top-rated CMBS issues should be downgraded. It's unclear if the default risk of these highly rated issues has increased. 

For more:
- here's the article

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