Of course we all know the law of unintended consequences but some of us don’t know that Robert Burns - eternal poet laureate of Scotland - said it better: “The best laid schemes of mice and men gang oft agley”
Example: the new Obama regulatory package that went into effect in late June makes rating agencies like Fitch, Moody’s, S and P liable for bond ratings. In other words they too can be called to the courtroom upon default or interest nonpayment of the bonds. God knows they’re not angels; often paid by the bond issuer which seems to beg bias. And clearly they and their bloated ratings are the partial perps of the housing bubble. But now they’re scared witless by this new regulation. Consequently, says the Wall Street Journal, they refused to rate Ford’s planned asset backed bond issue. Ford
naturally withdrew the issue. Can you imagine the interest they would have to pay on unrated bonds - packages of auto loans in this case? Think that revived the Obama stimulus? Rather an undertaker to the fiscal corpse. Bye, bye new jobs for salesmen, automotive assemblers, mechanics, and parts manufacturers.
Believe it or not the SEC noticed the chaos with the Ford bonds and other issues. They are considering a temporary solution wherein bonds could be issued without ratings. No explanation was offered as to why this wouldn’t affect interest rates. But don’t worry the SEC is charging to the rescue.
The humor of Ted, the Scribbler on the Roof, appears in newspapers around the U.S., on National Public Radio in Huntsville, and numerous web sites.