« Dr. Szasz, non-psychiatric physician | Main | Musical training in childhood improves lifelong language and hearing »

On downgrading banks

The potential downgrades would cost those institutions billions of dollars in higher interest payments, steeper collateral costs and missed revenue opportunities.

What's making executives at Morgan Stanley and the scores of rivals waiting for Moody's decisions even more frustrated is they are fighting against an army of credit-rating analysts who are nowhere near as well-known and are paid a fraction of what bankers get. Even finding someone to blame can prove elusive, as Moody's ratings actions are decided by a voting committee of about a dozen analysts whose identities are never disclosed.

Moody's actions are faceless by design. The aim is to shroud at-times contentious decisions in an aura of mechanic precision, and to protect its analysts from the personalized attacks they may otherwise endure from finance ministers, bank executives and other debt issuers unhappy with their decisions.

Mr. ory Winans Bauer is an unlikely antagonist for the titans of Wall Street. People who know him say he has a tactful manner, which embodies the image Moody's has sought to project throughout its review, one of the firm's most controversial in recent years.

Behind the scenes, Mr. Bauer and his team of around 170 analysts world-wide are a powerful group, pushing through ratings cuts that have delivered a sobering message to some of the finance world's most-powerful executives: Banks can't be trusted to manage their own risks.

As the head of the global banking team, Mr. Bauer guides his team's priorities, working with analysts to ensure that the ratings accurately reflect banks' risks. He directs analysts to write research pieces and, if it's a particularly important article, will co-author it.


TrackBack URL for this entry:

Post a comment

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)