Ratings agencies downgraded

When Standard & Poor's downgraded Greek government bonds to junk status at the end of April and followed this up with downgrades for Spain and Portugal, it moved the markets. But QFINANCE blogger Anthony Harrington wonders why ratings agencies are still so influential, particularly in the light of their role in stoking up the credit crisis by giving an unduly positive veneer to hundreds of toxic CDOs. He suggests that investors should pay more heed to credit default swap prices, but also make sure you read our exclusive article by Standard and Poor's chief economist David Wyss on credit ratings, and read our checklist on how to use credit rating agencies.

Shedding pension risk

How should corporates limit their exposure to the unquantifiable liabilities associated with their defined-benefit pension schemes? Deloitte partner Tony Clare suggests a number of strategies in his new viewpoint article, including switching employees out of DB schemes and into defined-contribution schemes, and pursuing "buyouts," which mean offloading liabilities onto an insurance or third-party company. He also predicts that CFOs will be increasingly wary of serving as trustees of their own organizations' DB schemes, largely for fear of conflicts of interest. Also read what Steven Lowe and Amarendra Swarup separately have to say on pension fund liabilities on the balance sheet, and Pension Corporation founder Edmund Truell about how to manage pension costs.

Taxing time for bankers

The IMF has responded to a request by the G20 to deliver proposals for constructive ways of taxing the finance sector. The fund is recommending two taxes, a financial stability contribution (FSC) and a financial activities tax, or FAT tax. The measures are to be debated at the Toronto G20 Summit in June. For a reaction to the IMF's ideas, see Anthony Harrington's blog post "IMF FAT tax, fat chance..." Angela Knight, chief executive of the British Bankers' Association in the UK argues for an alternative approach to the banking sector in her QFINANCE article, "The Crash and the Banking Sector-The Road to Recovery."

Bad for Goldman, good for America

The SEC's decision to prosecute Goldman Sachs for defrauding investors in its Abacus 2007-AC1 synthetic collateralized debt obligation has sparked divergent views from our bloggers. Anthony Harrington suggests the SEC's action was politically motivated, timed to wrongfoot Goldman Sachs and designed to mask the regulator's poor handling of the allegedly fraudulent Stanford International Bank. In another blog post, Ian Fraser suggested the SEC's charges against Goldman Sachs signal a change of mood in Washington, DC, and a new determination to prevent over-mighty investment banks from rigging the global capital markets in their favor. Fraser writes: "Gone are the days when what was good for Goldman Sachs was deemed to be good for America."