Moody’s Investor Service

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January 31, 2010

In this unruly sea of financial transactions and market uncertainties, Americans look to an investing service like Moody’s for guidance. With over 1,000 independent financial advisors, Moody’s represents a large body of professional economic experts. In their latest prediction, the financial market will continue to suffer throughout 2010. This month, Moody’s VP Craig Emrick stated, “We do not believe asset quality deterioration for the U.S. banking industry has reached its peak, and we therefore anticipate multiple quarters of losses for a large number of rated banks.” He added that 44% of the banks they rated showed net losses this year, but some residential real estate transactions have “caught up and surpassed [expectations] by some measures.”

The primary job of Moody’s Investor Service is to provide ratings on stock products, bonds and financial commodities. Investors (either individuals or businesses) who wish to sink their dollars into something usually check the rating system first before deciding how much to invest or where to put their money. In addition to investment advisory services, Moody’s also “publishes investor oriented credit research, including in-depth research on major debt issuers, industry studies, special comments and credit opinion handbooks,” www.moodys.com reports. This information often affects buyer purchasing decisions, such as when to buy a new automobile, when to buy real estate or what sort of investments they should sell off.

Some people have argued for reform of Moody’s Investor Service and other rating agencies like it. “Ratings services still exert significant influence, if only because clients still adhere to old methodologies,” William H. Gross of the Pacific Investment Management Company (PIMCO) told the NY Times in an email. Some argue that a government advisory council should oversee the rating process, since, in the end, it is the government that winds up bailing out these failed financial institutions like Lehman Brothers. Others say the issuer-payer model that was introduced in the seventies needs to be eliminated because it’s a conflict of interest.

Rene Lacape is a seasoned insurance agent. He has been dealing with both corporate and individual accounts for several years up to the present. If you need him, you can check his website and give him a call. Act now.

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