This is the type of self-regulation that 'free market' true believers like Alan Greenspan argue is the most efficient and effective.
Attorneys of the class action variety take note.
Holders of this CDO and others should hit the exits in a 'free market' response. Aren't 'free markets' wonderful (after the fact)? Perhaps we can declare Manhattan south of Houston Street a 'free market zone' and have 'free streets,' free of all police presence and response. Oh, going out to lunch? Have a good day.
BlackRock CDO Seeks to Drop Fitch Rating After Downgrade Threat
By Neil Unmack
May 27 (Bloomberg) -- BlackRock Financial Management Inc., part of the largest publicly traded U.S. fund company, plans to drop Fitch Ratings from one of its collateralized debt obligations after the firm threatened to cut the deal.
BlackRock's Omega Capital unit asked bondholders to agree to ask Fitch to withdraw its ratings on its Palladium CDO II sold by BNP Paribas SA, it said in a Regulatory News Service statement. The move would leave the CDO with one rating from Standard & Poor's.
New York-based Fitch last week said it may cut Palladium's ratings by as many as four levels after it changed the way it grades CDOs pooling company debt. Fitch's review could threaten downgrades on almost half of top-rated CDOs backed by derivatives. The firm is reassessing its ratings to reflect higher default risks.
CDOs group bonds, loans or credit-default swaps, channeling the income to investors in portions of varying risk and credit ratings.
To contact the reporter on this story: Neil Unmack in London nunmack@bloomberg.net
Last Updated: May 27, 2008 07:41 EDT
