The logic the rating agencies come up with never fails to entertain. Now Moody’s says it’s thinking of downgrading U.S. Bancorp.—a company that cruised through the credit panic, remember, and is easily one of the best-managed companies in the country—because of “increasing competition now that [USB’s] peers have largely returned to health and are actively seeking growth.”
Good lord, are those Moody’s people idiots. First, if USB’s competitors are doing so much better now, is Moody’s considering upgrading them? Um, no. Did USB itself get an upgrade back when its competitors were flailing while it was prospering? No, again. Instead, Moody’s has somehow come to believe that USB’s financial strength might have deteriorated because it . . . continues to operate in a normal, cyclical competitive market in which it has proven, material competitive advantages. How do they come up with this?
If you had to blame a single group for the credit crunch and its aftermath, it would be the rating agencies. If they hadn’t figured out a rationale for rating subprime paper triple-A in the first place, the crackup never would have happened. And yet you see how their “reasoning” works. Fools. I’m at a loss to see why anyone takes their judgments seriously anymore.
What do you think? Let me know!