

Fitch Installs Its Own Glass-Steagall - nameless_noob
http://www.nakedcapitalism.com/2011/10/fitch-installs-its-own-glass-steagall.html

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SkyMarshal
Fitch is being clever for another reason as well. By being first to downgrade
these major banks, they can do it with relatively minor consequences, since
there are still 2 out of 3 ratings agencies that haven't downgraded yet.

SOP for funds with credit quality requirements measured by the ratings
agencies is typically that at least 2 out of the 3 agencies must agree on the
rating.

If one of the three downgrades, no changes have to be made to the fund
composition, but if a second downgrades it could set off a huge wave of
selling and rebalancing as funds adjust their portfolio credit quality.

It's the second agency to downgrade these banks that will really throw a
monkey wrench into the financial system. Fitch may be reading the writing on
the wall (Euro crisis + US political gridlock) and betting that downgrades
will be inevitable, so may as well get the jump on the other two agencies.

