Monday, June 18, 2018
Editorials

Editorial: Slipping back into bad financial habits

Congress failed to change the way the nation's credit rating agencies do business when it had a chance after the 2008 financial crisis. Now the folly of that failure is apparent again. Standard & Poor's, one of the big three credit rating agencies, is up to its old tricks, handing out higher ratings than its competitors to lure business. The financial incentives under the "issuer pays" model, where the agencies get paid by the bank packaging the security, always will be a problem. Congress should revisit the issue and reform the way the industry works.

It has been only five years since the financial sector's greed and irresponsibility brought the country to the brink of economic collapse and launched the Great Recession. A multitrillion-dollar bailout and recovery is still underway, and employment numbers have yet to fully rebound. The three big credit rating agencies — Moody's, Fitch and S&P — enabled the crisis by handing out gold-plated ratings indicative of the most secure investments to toxic mortgage-backed securities in exchange for fat fees.

After investors lost nearly everything, the credit rating agencies promised to reform. But S&P is handing out disproportionately high ratings on commercial mortgage securities and attracting a flow of business as a result, according to the New York Times.

S&P rejects any conclusions that suggest its ratings are influenced by a conflict of interest. But David Jacob, who ran the S&P division that rated securities after the financial crisis, told the New York Times that he witnessed employees altering criteria in response to business pressures. An independent analysis for the newspaper of certain mortgage-backed securities rated by S&P and its rivals found S&P doling out higher ratings. This has led to the ratings agency tripling its market share in the first half of 2013. S&P is also the only firm of the big three to face a multibillion-dollar government lawsuit that claims it relaxed standards to win business before the crisis.

The financial system still relies to a great extent on the ratings given by the big three agencies. Many institutional investors may only buy instruments that have been given a top AAA rating by one of those firms. The agencies have tightened their ratings standards since 2008, but with S&P becoming more generous, it's only a matter of time before the others follow suit, if only to maintain market share.

In 2010, when Congress passed the Dodd-Frank financial reform law, oversight of the agencies was strengthened. But the law didn't eliminate the inherent conflict of interest in the "issuer pays" model. The law also asked the Securities and Exchange Commission and the Government Accountability Office to study alternative payment schemes, but that hasn't led to needed reforms. There was a time when the buyer of bonds paid for the ratings information, resulting in unbiased, dependable, investor-friendly ratings. It's an idea worth exploring again.

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Editorial: Trump should stop taking children away from parents at the border

Editorial: Trump should stop taking children away from parents at the border

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Updated: 1 hour ago

Editorial: ATF should get tougher on gun dealers who violate the law

Gun dealers who break the law by turning a blind eye to federal licensing rules are as dangerous to society as people who have no right to a possess a firearm in the first place. Yet a recent report shows that the federal agency responsible for polic...
Published: 06/17/18
Updated: 06/18/18
Editorial: Encouraging private citizens to step up on transit

Editorial: Encouraging private citizens to step up on transit

The new grass-roots effort to put a transportation package before Hillsborough County voters in November faces a tough slog. Voters rejected a similar effort in 2010, and another in 2016 by elected officials never made it from the gate. But the lates...
Published: 06/15/18
Editorial: 40 years later, honoring remarkable legacy of Nelson Poynter

Editorial: 40 years later, honoring remarkable legacy of Nelson Poynter

Forty years ago today, Nelson Poynter died. He was the last individual to own this newspaper, and to keep the Times connected to this community, he did something remarkable. He gave it away.In his last years, Mr. Poynter recognized that sooner or lat...
Published: 06/15/18

There was no FBI anti-Trump conspiracy

The Justice Department released Thursday the highly anticipated report on the FBI’s handling of the Hillary Clinton email probe and other sensitive issues in the 2016 election. It is not the report President Donald Trump wanted. But there is enough i...
Published: 06/14/18
Updated: 06/15/18

Voter purge may be legal, but it’s also suppression

The Supreme Court’s ruling last Monday to allow Ohio’s purging of its voter rolls is difficult to dispute legally. While federal law prohibits removing citizens from voter rolls simply because they haven’t voted, Ohio’s purge is slightly different. T...
Published: 06/14/18
Updated: 06/15/18

Editorial: Free rides will serve as a test of whether the streetcar is serious transportation

Who wouldn’t jump at the chance to ride for free?This fall, the TECO Streetcar Line eliminates its $2.50-a-ride-fare, providing the best opportunity yet to see whether the system’s vintage streetcar replicas can serve as a legitimate transportation a...
Published: 06/14/18
Updated: 06/15/18

AT&T and the case for digital innovation

A good way to guarantee you’ll be wrong about something is to predict the future of technology. As in, "One day, we’ll all …" Experts can hazard guesses about artificial intelligence, driverless cars or the death of cable television, but technologica...
Published: 06/14/18
Editorial: State, nonprofits share obligation to help Hillsborough’s foster kids

Editorial: State, nonprofits share obligation to help Hillsborough’s foster kids

The Florida Department of Children and Families has correctly set a quick deadline for Hillsborough County’s main child welfare provider to correct its foster care program. For too long the same story has played out, where troubled teens who need fos...
Published: 06/14/18
Editorial: Educate voters on Amendment 4 and restoring felons’ rights

Editorial: Educate voters on Amendment 4 and restoring felons’ rights

This fall voters will have 13 constitutional amendments to wade through on the ballot, but Amendment 4 should get special focus. It represents a rare opportunity to rectify a grievous provision in the Florida Constitution, which permanently revokes t...
Published: 06/13/18
Updated: 06/14/18