Monday, May 3, 2010

ECB Blows Off Ratings Agencies

Today the ECB released this statement:

The Governing Council of the European Central Bank (ECB) has decided to suspend the application of the minimum credit rating threshold in the collateral eligibility requirements for the purposes of the Eurosystem’s credit operations in the case of marketable debt instruments issued or guaranteed by the Greek government. This suspension will be maintained until further notice.

The Greek government has approved an economic and financial adjustment programme, which has been negotiated with the European Commission, in liaison with the ECB, and the International Monetary Fund. The Governing Council has assessed the programme and considers it to be appropriate. This positive assessment and the strong commitment of the Greek government to fully implement the programme are the basis, also from a risk management perspective, for the suspension announced herewith.

The suspension applies to all outstanding and new marketable debt instruments issued or guaranteed by the Greek government.


The ECB has in effect nullified the influence of the Ratings Agencies and declared that Greek Government debt will be perpetually acceptable as collateral in European Central Bank operations no matter what these Agencies declare.

Now if we could only get our Federal Reserve Board and Treasury Department to give the Ratings Agencies the same treatment here in the U.S. !

8 comments:

Mike Sandifer said...

You know, what really infuriates me is that the Germans could have headed off this crisis by simply guaranteeing that Greece wouldn't be allowed to default. Instead, they opted for this pennywise, pound foolish approach which is costing them far more. This trauma, including significant hits to asset markets here, was entirely avoidable.

On the rating agencies, the government should clean house and make any and all financial conflicts of interest illegal.

Tom Hickey said...

The rating agencies need to be investigated and prosecuted if there is enough evidence for their role in the GFC (Global Fraud Crisis). Plus, this conflict of interest scam needs to be put to an end immediately.

googleheim said...

Does anyone remember when the IMF bailed out South Korea due to fraud involved with bankrupting that nation so IMF ( usa ) could bail them out so that the South Koreans could still operate and sell their integrated memory devices / factories at below market prices so that we effectively put AMD and other American device makers into Legacy if not bankruptcy ?

Argentina part II.

The Germans think their taxes pay for everything in the EU ?

Yes, especially the subjecation of 10 million greeks so that the Northern Europeans can enjoy their extensive infrastructure and "honor system" - barrier-free train stations while Greece remains their vacation spot.

I don't get it.

The corrupt Greek government is allowing the EU to stuff ALL their debt into Greece - $300 billion debt for a country of 10 billion population ???

As in Argentina we saw the Spanish Government who bought Aerolineas Argentinas STUFFED all their Spanish debt and took out all the Argentina assets.

The clerk from SOCIETY GENERAL de France was a "FALL GUY" and the dweeb from GOLDMAN SACHS was a FALL GUY too !!!

It is a massive scam that keeps repeating itself.

AND PEOPLE ARE HAVING BAKE SALES TO HELP OUT THEIR CHILDREN WHO ARE DISABLED GI'S FROM THE WAR !! ??

whatever.

googleheim said...

sorry, i meant Greece has a population of 10 million

300 / 10 = 30,000 per capital debt.

where are the assets ?
( double ledger system ... )

in germany of course, and monacco.

bubbleRefuge said...

where is the link to the fed re-opening the currency swap lines?

Matt Franko said...

JC,
I think that was some "chatter" that Warren M had picked up.

there is no official word out yet as far as I can tell. I would expect the Fed to make an official release if they do such an operation with the ECB.

Resp,

bubbleRefuge said...

Matt, If they do it, Bernanke ought to be tried for treason.

Mike Norman said...

Bubble:

Go to the link on the left side of this blog it's the Federal Reserve's Weekly statement. Gets released every Thursday at 4:30 ET. You'll find it in the line item, "Central bank liquidity swaps."