Don’t mess with the ratings agencies! I’ve hinted at that more than a few times here. On November 30 when Moody’s threatened to cut the ratings of about $105 billion in SIVs, I did a quiet nod and a bit of a fist pump. But in my mind, I was believing that the ratings agencies finally got a clue that they needed to fight back and say “Don’t fuck with us!” Because whether you like their cooperation, coordination or complicity in creating this mess in the first place, we have fiduciary rules that cannot be rescinded fast enough to avoid the bigger consequences of the ratings agencies downgrading the crap. So all you politicians - you better back off. Because as I have said here, if you force the ratings agencies to cut their grades on all the stuff sitting in money market mutual funds or pension funds or insurance companies or state and municipal funds, we are done here. And by done. I mean the banking system, financial markets and economy would crumble. So Moody’s and S&P and Fitch - please do what you need to do. In the end, Citi got downgraded for taking on the SIVs. One downgrade placed where it should be. The market can handle it. Citi can handle it. Will they find it more difficult to get funding? Yep - well kinda. Remember who the biggest banks borrow from. HMMMMM!?! They borrow heavily when they need it from the Central Bank. What a coincidence that the Fed announced TAF a few days before Citi took on the SIVs and in a few days, I suspect Citi will be bidding at the auction. In my opinion, the ratings agencies have a power that equals or exceeds the Central Bank and we need to realize that.