SEC Probe of Raters Reveals Conflicts in Grading Debt [who'ldathunk?]

[jk]

another in a series of revelations of the obvious:

SEC Probe of Raters Reveals Conflicts in Grading Debt
By Jesse Westbrook
July 8 (Bloomberg) -- A U.S. Securities and Exchange Commission investigation into credit-rating companies found the firms improperly managed conflicts of interest and violated internal procedures in granting top rankings to mortgage bonds.
A 10-month review of Moody's Investors Service, Standard & Poor's and Fitch Ratings found instances in which analysts contributed to fee discussions and weighed the likelihood they would lose clients if they issued certain ratings, the Washington-based SEC said in a report released today. Employees also cast doubt on the quality of some ratings, the SEC said.
``We uncovered serious shortcomings at these firms,'' SEC Chairman Christopher Cox said today at a news conference. ``When there were not enough staff to do the job right, the firms sometimes cut corners.''
Pension and money-market funds bought AAA-rated securities backed by mortgages made to the riskiest borrowers because they offered higher returns than government bonds with the same ratings. In many cases, credit raters were paid by investment banks selling the bonds, prompting regulators and lawmakers to question their independence.... [hmmmm?]


http://www.bloomberg.com/apps/news?p...d6s&refer=home


who'ldathunk?
i think they do these reports so that high rollers and co-conspirators can make believe these facts were previously unknowable, when they're subpoenaed. the facts only become officially known on the report's release.

[metalman]

Re: SEC Probe of Raters Reveals Conflicts in Grading Debt [who'ldathunk?]

another in a series of revelations of the obvious:

SEC Probe of Raters Reveals Conflicts in Grading Debt
By Jesse Westbrook
July 8 (Bloomberg) -- A U.S. Securities and Exchange Commission investigation into credit-rating companies found the firms improperly managed conflicts of interest and violated internal procedures in granting top rankings to mortgage bonds.
A 10-month review of Moody's Investors Service, Standard & Poor's and Fitch Ratings found instances in which analysts contributed to fee discussions and weighed the likelihood they would lose clients if they issued certain ratings, the Washington-based SEC said in a report released today. Employees also cast doubt on the quality of some ratings, the SEC said.
``We uncovered serious shortcomings at these firms,'' SEC Chairman Christopher Cox said today at a news conference. ``When there were not enough staff to do the job right, the firms sometimes cut corners.''
Pension and money-market funds bought AAA-rated securities backed by mortgages made to the riskiest borrowers because they offered higher returns than government bonds with the same ratings. In many cases, credit raters were paid by investment banks selling the bonds, prompting regulators and lawmakers to question their independence.... [hmmmm?]


http://www.bloomberg.com/apps/news?p...d6s&refer=home


who'ldathunk?
i think they do these reports so that high rollers and co-conspirators can make believe these facts were previously unknowable, when they're subpoenaed. the facts only become officially known on the report's release.

alright. here's the plan. itulipers get together and run a giant scam that involves a wall street investment bank, our congress critters, the treasury, the bls, the fed, and any other gov't weasels we can bribe. after we collect all the moolah and it blows up we say, "gee whiz. how'd that happen? oh, well. we sure learned our lesson! we won't run that scam again, er, i mean we we'll reform the rules and learn from our mistakes, and blah, blah, blah."

then we'll run a new scam. you in?

[kingcopper]

Re: SEC Probe of Raters Reveals Conflicts in Grading Debt [who'ldathunk?]

and on & on it'll go!;) That's Wall Street...Our Scams are top tier rated!

[World Traveler]

Insider e-mails: SEC Probe of Raters

Excerpts. Insiders speak in their own words.

"In another email, an analytical manager in the same rating agency’s CDO group wrote to a senior analytical manager that the rating agencies continue to create an “even bigger monster – the CDO market. Let’s hope we are all wealthy and retired by the time this house of cards falters.;o).” Email No. 2: Analytical Manager to Senior Analytical Manager (Dec. 15, 2006, 8:31 PM). "

"For example, in one exchange of internal communications between two
analysts at one rating agency, the analysts were concerned about whether they should be rating a particular deal. One analyst expressed concern that her firm’s model did not capture “half” of the deal’s risk, but that "it could be structured by cows and we would rate it.”

Report is worth reading, contains a lot of revealing quotes and e-mails from insiders. Plus the report does a good job of documenting how ratings agencies were under-staffed and lax in following procedures.