Moody’s is being sued by DOJ, US Manufacturers recorded strongest upturn in business, Mega-Merger AT&T agreed to purchase Time Warner
October 24, 2016
The old saying, “What goes around, comes around” reverberated through the ratings agency community over the past few days. Ratings agency Moody’s is being sued by the Department of Justice (DOJ) for rosy ratings placed on Mortgage Backed Securities prior to the financial crisis that began mid-2008. Moody’s said that a number of states are also pursuing the company. The ratings agencies awarded positive ratings to residential mortgage Bonds that eventually went sour, which then caused widespread losses. S&P rating agency paid out $1.5 billion in 2015 in a similar case. The other big credit rating agency, Fitch, will most likely be the DOJ’s next target.
The Markit Flash U.S. Manufacturing PMI shows U.S. manufacturers recorded their strongest upturn in business conditions for 12 months in October. The headline PMI rose to 51.5 in September to 53.2 in October with output and new orders hitting one-year peaks. The report went on to say that manufacturers reported that supportive domestic economic conditions remained a key growth driver. Chris Williamson, Chief Business Economist at IHS Markit said, “Manufacturing showed further signs of pulling out of the malaise seen earlier in the year, starting the fourth quarter on a solid footing.”
A mega-merger was announced over the weekend where telecommunication giant AT&T has agreed to purchase Time Warner and will provide AT&T an entry into entertainment and media. If approved by regulators, AT&T will have to fork over $85 billion or $107.50 a share on Time Warner. AT&T, Inc. is a worldwide communications company bringing pay TV, mobile, high-speed internet, and voice services to its customers. Time Warner, Inc. is a global leader in media and entertainment business and the owner of popular brands such as HBO, CNN, TNT, TBS, Warner Bros., and Cartoon Network.