Is there a hidden agenda somewhere?
New Zealand runs the risk of a sharp correction in property prices, credit ratings agency Standard & Poor’s says
February 28, 2013 -
International credit ratings agency Standard & Poor’s is warning that New Zealand and its banks are vulnerable to a sharp correction in property prices.
In a report on the New Zealand banking outlook S&P says its “base case scenario” sees real estate prices continuing to stabilise at current levels over the medium term, and such an occurrence having a stabilising effect on asset-quality ratios, especially as residential mortgage loans account for approximately 60% of the total banking sector loans.
The US Department of Justice on Monday filed a civil suit charging Standard & Poor’s Ratings Services, the world’s biggest credit rating agency, with defrauding investors and the public by inflating the credit ratings it gave to subprime mortgage-backed securities in the run-up to the 2008 financial crisis.
Coming nearly four-and-a-half years after the Wall Street crash, the suit is the first federal action against a credit rating firm. S&P and its main competitor, Moody’s Investors Service, played a critical role in the vast edifice of financial speculation and fraud that came crashing down following the bursting of the housing bubble in 2007.
S&P, Moody’s and Fitch Ratings are all private, for-profit companies. As previous US government investigations have documented, S&P and Moody’s made huge profits between 2004 and 2008 by landing contracts from Wall Street banks to rate residential mortgage-backed securities (RMBS) and collateralized debt obligations (CDOs), which were assembled by the banks from home loans and sold to other financial institutions and investors around the world.