Countering criticism that the Obama economic team is out of touch, Treasury Secretary Tim Geithner issued new protocols today affecting investor services companies. Based upon the system for rating motion pictures, the new rules mandate use of letter grades to rate stocks, securities and financial institutions.
Until now, companies such as Moody’s and Standard & Poors have collected, analyzed and disseminated information about the risks of corporate and government investment offerings, as well as the strength of banks. However, this system failed to provide warning of the collapse of major financial institutions.
“Companies that were supposed to give accurate information about risks like bundled mortgage-backed securities failed,” said Treasury spokesperson Bill Dollarhide.
For a solution, Dollarhide said Sec. Geithner has turned to Hollywood. Beginning May 1, investments and government bonds will be assigned risk ratings of G, PG, R, NC-17 or X.
“This is a simple labeling system that is easier for investors to understand, as well as providing opportunities to innovate Wall Street,” said Dollarhide.
He said investments might be promoted in new ways. For example, instead of issuing a prospectus, a corporation might promote its stock through poster campaigns and action-oriented trailers.
Dollarhide also said corporations would be more likely to premiere blockbuster stock offerings in the summer and Thanksgiving weekend. Riskier, more intellectual investments would debut in December in order to qualify for the following year’s Academy Award nominations.
|The New Ratings for Investments:|
|G||“Grandma.” So safe even your Grandma could invest in it.|
|PG||“Passably Good.” Low Risk, could earn enough over 15 years to pay for your kid’s tuition to a community college.|
|PG-13||“Possibly Good-13.” Low-Moderate Risk, suitable to give as Bar/Bat Mitzvah gifts.|
|R||“Reamed.” A High Risk investment|
|NC-17||“No Credit-17.” Seventeen weeks after purchase your credit rating will go into the toilet.|
|X||“X.” Invest in this and you’ll get screwed.|