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Author Topic: Credit rating agencies testify before congress  (Read 687 times)

danickstr

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Credit rating agencies testify before congress
« on: October 22, 2008, 04:56:46 pm »

Apparently they knew that the bonds made of the sub-prime mortgages were not worth the ratings they assigned.. but guess who paid them to rate the bonds?

A case of the fox guarding the henhouse.

I actually used to trust the ratings of Moody's and Standard and Poor's - oh wha ta goo siam.
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Nick Dellos - MCPE  

Food for thought for the future:              http://http://www.kurzweilai.net/" target="_blank">http://www.kurzweilai.net/www.physorg.com

RSettee

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Re: Credit rating agencies testify before congress
« Reply #1 on: October 22, 2008, 06:51:48 pm »

I've maintained that all of these "bad credit/ no credit/ bankrupcy" loans places have had me baffled for years. Like, you REALLY think that giving loans to people with bad credit or bankrupcies is a good idea? There's a reason why those people couldn't pay the first time. Credit is there so that you can use it when you don't have the money....not to borrow and then decide whether you're going to pay it back. People seem to forget that when they sign the credit loan, it's in trust--and ultimately, your name and reputation is only worth as much as you want it to be.

The credit places were so blinded by the high interest rates for the high risk loans, that they never properly evaluated whether or not people could pay that money back. Unless you're making 100 grand a family per year, taking out hundreds--or multiple hundreds--of thousands of dollars of loans is just downright unreasonable. If you let people think that they have what it takes to keep up with the Joneses, some will. The "illusion" that they have everything is worth more to those people than the stress levels of juggling bills that almost seemingly never get paid, telling your kids that you "can't afford it", yet live in a very high end residence, etc.

But the banks and credit places knew it all along....responsible people never take out more than they can afford, and they generally don't buy into the constant shilling for that credit. They don't "take the bait", in other words. I keep on getting tons of pre-approved credit at places....which is all fine and nice, but with their interest rates, i'd never be paying anything off in principal.
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