CNBC today absolutely ripped a Standards and Poors spokesman on why yesterday AIG had a AAA credit rating and today, after this deal, it is now A-. They said Standards and Poors is complicit in this disaster and asked the question, which was avoided, never answered on how AIG could have a AAA credit rating until today. Great job CNBC and that is a very good question on these credit ratings companies did not downgrade financial institutions much earlier. The S&P representative did not answer the questions. Watch this video clip and see the disgust upon their faces at the end. Question after question and they just don't get a straight answer.
. AIG had a credit rating of AAA until the close yesterday. The rating agencies required AIG to raise additional capital valued at USD40 billion as a prerequisite for maintaining its AAA rating. After the close yesterday, two smaller rating agencies reduced their rating below AAA. Last night, Standard & Poor’s lowered its rating from AAA to A-. Later, Moody’s lowered its rating from AAA to A2
RGE Monitor has some more details on outstanding credit default swaps.
Called CDSes, these are the hidden risks and here is am overview on what these beasts are.
As soon as the video clip is available, I will post with an update.