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Meet -- new bosses.
Financial boxes that is there they are right there.
There's DeVon Sharma the president Standard and Poor's and Michael -- a global managing director of Moody's Investors Service.
Now both of these guys testifying today in front of the house committee on financial services.
To men two companies.
All with the power to make your financial life a living nightmare.
That's because these folks like Sharma influenced professional investors all over the world.
Their views are more than just suggestions.
They carry huge -- with people in this world.
In a world of serious investing.
-- Sharma around one -- their analysts decide that our nation isn't likely to pay back its debts.
-- then those professional investors in Shanghai -- -- New York.
May decide to invest their money in something other than US treasuries.
And let me tell you that's where the trouble starts a downgrade in our nation's debt from.
Anyone of these agencies could set in motion a spike in interest rates a stock market sell off even a recession.
It happened recently in Europe Greece and Ireland were downgraded professional investors dumped their debt interest rate shot through the roof.
As those countries were forced into a bail out.
The two countries are still suffering the consequences of that.
So I think today it's really pretty powerful stuff.
Yet in testimony today before the house the two executive thing downplayed their significance.
-- downright modest.
S and -- ratings are not statements of fact said Sharma but rather expressions of opinion about the likelihood that certain events will or will not happen in the future.
Look truth is they -- usually powerful.
Robert Reich a liberal economist says this if you think deficit reduction is being driven by John Boehner or Harry -- Thank again the biggest driver right now is Standard and -- Imagine.
A little New York company with just one point seven billion in annual sales determining the future of our fourteen trillion dollar economy.
Our new economic bosses I guess.
All of which might be OK if rating agencies got things right.
And fortunately they missed one pretty big call dramatically.
The mortgage meltdown rating agencies backed mortgage investments that turned out to be.
It was probably their biggest mistake ever congressman Spencer Bacchus who chaired the committee hearing said this today.
The credit rating agencies.
In the years leading up to the financial crisis.
Government seal of approval for credit rating agencies.
Led to a -- pricing of risk and the subsequent collapse and market confidence.
All highly technical and all highly tragic.
Now your house -- 30% maybe 40% even 50% less than before the tobacco loans are tough to get the economy continues to suffer.
And at the start of all that one watchdog that wasn't watching.
The ratings agencies in testimony today -- -- a Fella who started his own rating agency in the wake of the meltdown.
Discredit the industry and -- poll of -- -- remember that were in.
And it's true enough in this case.
A small group of people with too much power.
A recipe for disaster and now that industry can decide to fix its reputation.
By making that toughest call of all a downgrade out our debt.
In the end it's UN I who are gonna --
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