When admission of liability is a risk

[globaleconomicollaps]

http://www.metafilter.com/124108/Whe...lity-is-a-risk

When admission of liability is a risk.
January 22, 2013 12:44 PM
Credit Rating Agencies and their role after the Crisis
It was the rating agencies that assigned super safe ("triple A") ratings to complex financial instruments. When these blew up, the agencies accepted no responsibility, claiming they had merely been expressing "opinions".
William J Harrington, who was a senior analyst says he has asked people at Moody's why those responsible weren't fired.
"That would be an admission of liability, I was told.
The Wall Street Journal talks about downgrading the agencies.

The full interview with Harrington.

[jk]

Re: When admission of liability is a risk

i don't see how firing people would be an admission of liability, that sounds like b.s. they expressed opinions. their opinions turned out to be flagrantly inaccurate, so they could be fired without saying more. if a tv exec exercises his opinions and bets on a bunch of losing tv series, he will be fired. where's the liability?

[vinoveri]

Re: When admission of liability is a risk

i don't see how firing people would be an admission of liability, that sounds like b.s. they expressed opinions. their opinions turned out to be flagrantly inaccurate, so they could be fired without saying more. if a tv exec exercises his opinions and bets on a bunch of losing tv series, he will be fired. where's the liability?

you apparently have been fortunate to avoid dealing constantly with lawyers and near-frivolous nuisance litigation. i work in patent law and can tell you that even this field is a racket with infringement lawsuits being filed that would be very unlikely to succeed at trial but which get settled to avoid litigation cost - lawyers wins, patentee troll wins ..

the tx exec does not cause $trillions in losses from pension funds etc as the claim would be against the rating agencies. even if they couldn't establish deliberate misleading, they would pursue negligence/imcompetence - although would think the rating agencies would have disclaimers all over the place. the firings indicate the agencies acknowledge their errors and would be used against them in any lititgation.

I was once associated with a gov facility working for the general contractor; there were several instance I observed that were borderline fraudulent, certainly abuse; i was working with a colleague who was a former Fed and had friends in the agency that ran the lab, and I complained to him of lack of oversight - his reponse tome was truly astounding - the gov agency would not investigate/sanction the contractor b/c such an act would reflect badly on the agency (since they had hired the contractor)!!! That was over the top cynicism ... and unfortunately true.

[don]

Re: When admission of liability is a risk

the tx exec does not cause $trillions in losses from pension funds etc as the claim would be against the rating agencies

If this was an opinion, it ranks with the opinion of the TBTFs tsunami of mortgage lending to lampposts, that ensued during the Great Housing Bubble.

This was all part of the now well-documented MBS fraud - a sprinkling of AAA rated mortgages layered on top of low grade subprime that through the magic of Moody's alchemy became pension-approved AAAs. Goldman notoriously shorted this fraud they helped create.