Monday, March 10, 2008 4 comments ++[ CLICK TO COMMENT ]++

Battle Between Fitch and MBIA Heating Up

Wow, Fitch won't just go away quietly. The battle between MBIA and Fitch is getting heated by the minute. Here are some headlines from MarketWatch.com:

1 minute ago - Fitch calls MBIA info destruction request 'disingenuous' - by Wallace Witkowski

11 minutes ago - Fitch asks if MBIA seeking equal S&P, Moody's concessions - MarketWatch

14 minutes ago - Fitch: MBIA requested destruction of key portfolio info - MarketWatch

16 minutes ago - Fitch willing to waive rating fee for MBIA - MarketWatch

22 minutes ago - Fitch sees conflict in MBIA partial rating withdraw request - MarketWatch

23 minutes ago - Fitch 'considering' MBIA request to withdraw IFS ratings - MarketWatch


Fitch is calling MBIA's bluff (the excuse that the fees are too high) and says it will waive its fee... Fitch also seems to suggest that there is a conspiracy between MBIA and the other two big rating agencies.

As an Ambac shareholder, I personally feel that Fitch isn't of much use and maybe Ambac should consider dumping Fitch as well. I will note however that this is a risk that can be backfire if some feel that the ratings of the other two aren't adequate. For what it's worth, those that don't trust the current ratings won't care one way or another; and those that do trust the rating are more likely to believe Moody's or S&P since they are more respected and have better brand recognition and analytical resources.

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4 Response to Battle Between Fitch and MBIA Heating Up

March 12, 2008 at 1:10 AM

those that do trust the rating are more likely to believe Moody's or S&P since they are more respected and have better brand recognition...

Not to be glib, but I believe you meant:

those that do trust the rating are less likely to believe Moody's or S&P since they were more respected and had better brand recognition...before their independence was compromised for structured product rating fees.

Long Fimalac :)

March 12, 2008 at 9:38 AM

heh :) Hey, as a Fitch shareholder you surely admit that even Fitch is kind of messed up. Their models are very flaky. How come they can't come up with a solid number?

March 12, 2008 at 1:17 PM

Agreed, Fitch is far from a wartless frog. But flaky model's are an industry wide issue - unless I'm mistaken, I don't S&P or Moody's even had negative YoY HPA as a possible scenario as recently as a year ago.

Also, the business is one of reputation. Because S&P and Moody's were the big dogs, they will (rightfully) being taking the most heat.

March 12, 2008 at 1:17 PM

...flaky models...

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