CommunityFDL Main BlogThe Bullpen

Rating Agencies Exposed for Helping to Create 2008 Financial Crisis

As Wall Street alumni Attorney General Eric Holder and Criminal Division head Lanny Breuer slept, private law firms took Wall Street to court. Through the lawsuits filed we have learned that the rating agencies, Moody’s and S&P, were well aware that what they were rating as extremely safe investments were in reality financial ticking time bombs. From Matt Taibbi:

Thanks to a mountain of evidence gathered for a pair of major lawsuits by the San Diego-based law firm Robbins Geller Rudman & Dowd, documents that for the most part have never been seen by the general public, we now know that the nation’s two top ratings companies, Moody’s and S&P, have for many years been shameless tools for the banks, willing to give just about anything a high rating in exchange for cash.

The system itself is flawed – you pay your rating agency – but emails reveal a culture of corruption.

In incriminating e-mail after incriminating e-mail, executives and analysts from these companies are caught admitting their entire business model is crooked.

Lord help our fucking scam?.?.?.?this has to be the stupidest place I have worked at,” writes one Standard & Poor’s executive. “As you know, I had difficulties explaining ‘HOW’ we got to those numbers since there is no science behind it,” confesses a high-ranking S&P analyst. “If we are just going to make it up in order to rate deals, then quants [quantitative analysts] are of precious little value,” complains another senior S&P man. “Let’s hope we are all wealthy and retired by the time this house of card[s] falters,” ruminates one more.

As we know the “house of cards” did “falter” with the taxpayers picking up the tab.

Of course since no one has gone to jail nor been made to pay for their crimes in any substantive way, can you blame Wall Street and their supposed independent rating agencies for being so corrupt? If capitalism is all about incentives – what is the incentive for following the law if by breaking it you face no penalty but gain massive rewards?

More evidence the Obama Administration had no interest in holding Wall Street accountable. They did take their money of course. I wonder how taking Wall Street’s money influenced their incentives.

CommunityThe Bullpen

Rating Agencies Exposed For Helping To Create 2008 Financial Crisis

{!hitembed ID=”hitembed_1″ width=”420″ height=”245″ align=”none” !}

As Wall Street alumni Attorney General Eric Holder and Criminal Division head Lanny Breuer slept, private law firms took Wall Street to court. Through the lawsuits filed we have learned that the rating agencies, Moody’s and S&P, were well aware that what they were rating as extremely safe investments were in reality financial ticking time bombs. From Matt Taibbi:

Thanks to a mountain of evidence gathered for a pair of major lawsuits by the San Diego-based law firm Robbins Geller Rudman & Dowd, documents that for the most part have never been seen by the general public, we now know that the nation’s two top ratings companies, Moody’s and S&P, have for many years been shameless tools for the banks, willing to give just about anything a high rating in exchange for cash.

The system itself is flawed – you pay your rating agency – but emails reveal a culture of corruption.

In incriminating e-mail after incriminating e-mail, executives and analysts from these companies are caught admitting their entire business model is crooked.

Lord help our fucking scam?.?.?.?this has to be the stupidest place I have worked at,” writes one Standard & Poor’s executive. “As you know, I had difficulties explaining ‘HOW’ we got to those numbers since there is no science behind it,” confesses a high-ranking S&P analyst. “If we are just going to make it up in order to rate deals, then quants [quantitative analysts] are of precious little value,” complains another senior S&P man. “Let’s hope we are all wealthy and retired by the time this house of card[s] falters,” ruminates one more.

As we know the “house of cards” did “falter” with the taxpayers picking up the tab.

Of course since no one has gone to jail nor been made to pay for their crimes in any substantive way, can you blame Wall Street and their supposed independent rating agencies for being so corrupt? If capitalism is all about incentives – what is the incentive for following the law if by breaking it you face no penalty but gain massive rewards?

More evidence the Obama Administration had no interest in holding Wall Street accountable. They did take their money of course. I wonder how taking Wall Street’s money influenced their incentives.

Previous post

Majority of Americans Would Support Radical Campaign Finance Reform

Next post

The Public Option "Alternatives" Are Proving to be Mostly Worthless

Dan Wright

Dan Wright

Daniel Wright is a longtime blogger and currently writes for Shadowproof. He lives in New Jersey, by choice.