TIL Banks Don’t Have Credit Ratings

On June 3, 2018, Cory Doctorow tweeted a link to a post on the Boing! Boing! website titled America is the world’s first poor rich country. Cory doesn’t seem to have a very good grasp of economics, so I typically ignore these kinds of posts, but the title was intriguing so I took the bait.

The post is a summary and then an extended quote from a Medium post of the same name by Umair Haque. Near the end of the portion that Cory excerpted is a stunning, obviously false claim (emphasis added),

Well, what happens if the average American steps over the line? Misses a mortgage payment, gets ill and is unable to pay a few bills on time, can’t pay the costs of healthcare? Then they are punished severely and mercilessly. Their “credit rating” (note how banks and hedge funds don’t have them) is ruined.

Of course banks, hedge funds and other financial institutions have credit and similar ratings. Companies like Moody’s, Standards & Poor, and Fitch all produce such ratings. And, unlike most personal credit, many of these ratings are generally publicly available.

For example, I do most of my banking with PNC. Here’s a full run-down of PNC’s various credit ratings from different agencies.

Yet both Haque and Doctorow felt qualified to make sweeping claims about the economy without having even a basic grasp that links like Standards & Poor exist to rate financial institutions.

It was both surprising and unsurprising to see Doctorow suggest an essay by Haque. Haque is clearly a bit of a nutcase, as exemplified by another Medium rant of his, The Breaking of the American Mind.

A large part of the essay deals with a minor kerfuffle created around the status of 1,500 minor immigrant children who arrived in the United States during the Obama administration. The children applied for asylum, and in many cases were placed with family members (often themselves in the United States illegally), while their asylum cases were adjudicated.

As Politifact summed it up,

From October to December 2017, the HHS Office of Refugee Resettlement attempted to reach 7,635 unaccompanied minors and their sponsors, said Steven Wagner, acting assistant secretary for the Administration for Children and Families within HHS in April.

Of the 7,635 children:

• 6,075 remained with their sponsors;

• 28 had run away;

• 5 had been deported;

• 52 relocated to live with a non-sponsor;

• 1,475 could not be reached.

. . .

“These children are not ‘lost’; their sponsors — who are usually parents or family members and in all cases have been vetted for criminality and ability to provide for them — simply did not respond or could not be reached when this voluntary call was made,” HHS Deputy Secretary Eric Hargan said in a May 28 statement.

Here’s how Haque frames this issue,

Yet shortly before all this took place, a lawyer of some sort took to Twitter(First, she remarked that the kids are OK?—?Schrodingers’ kids, remember?But she cannot have interacted with all of them, and didn’t claim to have talked to a single one. So are we to simply take her word for it? That is what most people appeared to do. Critical thinking, remember? But I digress.) She went on suggest that disappearances are good for the disappeared?—?better for the government not to able to keep track of people. Maybe vulnerable people can vanish and escape into thin air that way. Liberals cheered. How wonderful! Disappearances are not a bad thing after all! Hooray!!

Only a cursory glance at history suggests none of this is true in any way whatsoever. Disappearances in Argentina, Iraq, the Soviet Union, Maoist China and Nazi Germany did not mean that the disappeared had escaped. It meant that quite the opposite. Almost never in history have disappearances been good for the disappeared?—?usually, they have been very bad. It’s true that should an authoritarian government not be able to track you, that may well be a benefit to you. But that is not what a disappearance is, is it? A disappearance is the erasure of a person who already exists?—?not the failure to record a person’s existence in the first place. Surely the difference is obvious enough. And yet no one questioned any of this?—?because no one appeared to be thinking much at all.

This is little more than word salad of the variety that the Trump serves up on a regular basis.