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Ratings Debacle: The Long Path to Banking Reform
GAINESVILLE, Ga., May 14, 2010 --Senate reform, subpoenas, SEC investigations. It took a decade -- and the near collapse of our financial system -- for the public and regulators to scrutinize Wall Street banks and their rating agencies. Over eight years ago, in his 2002 NYT bestseller Conquer the Crash, Robert Prechter highlighted the glaring uselessness of this system: "The most widely utilized rating services are almost always woefully late in warning you of problems within financial institutions ... they just skip the downgrading process and shift the company's rating from 'investment grade' to 'default' status," he wrote. Prechter's prediction applies to other institutions as well. "Government sanctions of any companies, whether they sell mortgages or rate bonds, can lead only to disaster ... A company can collapse before the standard rating services know what hit it ... investors in [Fannie Mae and Freddie Mac] will be just as surprised when the stock prices and bond credit ratings collapse. Most rating services will not see it coming."
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About Elliott Wave International (EWI) Based in Gainesville, Ga., EWI is the world's largest market forecasting firm that specializes in Elliott wave analysis, a form of technical analysis based on crowd psychology and pattern recognition. EWI's analysts provide around-the-clock forecasts of every major market in the world. Learn more at www.elliottwave.com.
Robert Prechter is the president & CEO of Elliott Wave International and editor of The Elliott Wave Theorist and author of the 2002 New York Times bestseller, Conquer the Crash. Since 1978, Prechter has authored 14 books. His Elliott Wave Principle with A.J. Frost in 1978 predicted the great bull market. Conquer the Crash (first edition, 2002) forecasted the current global debacle in substantial detail. His two-book set Socionomics presents his seminal hypothesis that endogenously regulated waves of social mood determine the character of social actions.
Note to Media: To arrange an interview with Robert Prechter or to receive a review copy of Conquer the Crash, contact Alexandra Lienhard, 770-536-0309.