Wednesday, February 11, 2009

Stephen Joynt, Raymond McDaniel, and Deven Sharma

- Heads of Fitch, Moody's, and Standard & Poor's, the three main credit rating agencies -- financial gatekeepers responsible for rating debt based on the issuer's ability to repay on time!

- Claim they offer independent, objective ratings -- despite being paid by the very companies whose securities they rate!

- Relaxed ratings standards to win business during the housing boom -- giving investment-grade ratings to the very same subprime mortgage-backed securities that caused the collapse of the global economy!

- Revenue at the agencies doubled during the housing boom -- from $3 billion in 2002 to more than $6 billion in 2007!

- Continued to give investment-grade ratings to subprime mortgage-backed debt even after they knew how much risk these securities were adding to the financial system!

- S&P gave Lehman Brothers a triple-A rating just a month before Lehman declared bankruptcy!

- According to one S&P analyst, that agency would rate deals even if they were "structured by cows"!

- Claim they couldn't possibly have foreseen the current economic crisis -- even though they're supposed to be experts at understanding financial risk!

- Idiots!

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