Investors, Issuers Howl Over Plans to Change Asset Backed Securities Ratings

Do you remember the Ford Pinto? The 1970s car had a nasty tendency to explode into flames in rear end collisions. But the piece de resistance was when litigation exposed a Ford internal memo that showed the company was not only aware of the problem, but had run the math and concluded reinforcing the car would be more costly than compensating victims.

Similar logic is at work in the protests coming from the asset backed securities sector over plans to reform their ratings. Mind you, one of the ideas that is generating stiff resistance is an incredibly tame change, namely, that a structured finance instrument is a structured instrument by adding a special designation, such as "sf"