The CalPERS Lawsuit Against The Rating Agencies
The pre-emptive attack on the rating
agencies has begun. As Zero Hedge has long suspected, once the next
major leg down in the market occurs,populist anger will again have to
be directed away from its true focal point- the intersection of Wall
Street and DC. And since major investment banks such as Goldman have
already suffered major reputational
blows over the past several weeks, it behooves everyone to throw the
straw man in the open... In other words, the next congressional
lynching will focus exclusively on S&P, Moody's and Fitch, and
likely will result in the end of one or more of the rating agencies.
And last week's action by CalPERS is just the catalyst to get that particular avalanche rolling.
The lawsuit itself (below) has quite a few interesting tidbits of information, such as this:
The gist of the lawsuit for the most part should come as no surprise to anyone, what is odd is that it has actually occurred - one may ask just what is CalPERS' motivation to launch it now? Now the real question is just how deep will this inquiry lead: will discovery requests extend beyond just the rating agencies, and reach into the underlying issuers of the structured vehicles? If this case is not "handled" carefully, it may very well lead to significantly more questions than some of Wall Street's titans are willing to answer.
Regardless, this will be a case that will need a close following.