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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:
this:
and 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.
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let the lawsuit begin. it's time to eliminate those evil, stupid and corrupt rating agencies. subprime mortgage was rated "AAA". credit of the us is "AAA". credit of the us should be "Junk" because we can only print to pay. since we can't generate revenue, all those wealth-creating jobs are gone oversea. a violent Greater Depression is starting to enter upon america and people are still in denial. wake up sheeple.
Are rating agencies not in the same bed as Wall St? Is Gov not co-dependant with Banking / Rating Agencies?
The rating agencies could just as well down grade US Soverign Debt - one notch - what would that do to the 10yr yield?
Reguardless of what happens with the legacy rating agency "branding" - the same people will be employed by "someone" under the same Gov / Banking undisclosed interest to rate credit.
Bottom line - its a no win. at a precarious time politically.
That's pretty funny. I asked my neighbor over the weekend why the ratings agencies haven't been sued yet for their negligence and incompetence and the fact so much, if not all, the ratings they placed on the crap being packaged by WS firms and sold to Joe Blow were really junk and not AAA stuff. I'm happy to hear that S&P and Moodys and the rest of the incompetents are being sued.
The reason that suit is being initiated now is that CalPers and California are colliding over the budget deficit and the funding of the ridiculous pension plans of the state's public employees.
CalPers is looking for cover because of their massive stupidity, and now faces going back to the state for a bailout when the state is broke. This is laughable. If it weren't a complete catastrophe.
Interesting to see what happens. Probably will be settled out of court.
I think the NRSRO's will remain encapsulated in slippery teflon over layers of Kevlar. If they were held to account for the failures they are, it would be game over for the structures dependent on ratings. Their standing in the system will be maintained to keep the game going. The power that is will see to it.
Calipers isn't exactly innocent here. The fraud at every level in this whole ponzie economy was rampant.
It is neither good nor wise to sit back and allow all those policemen, fire fighters, and schoolteachers to have their retirements stolen by Wall Street. Unless, of course, we would prefer a Mexican-type system, in which we have to bribe the policemen and fire fighters each time we need them to come. It seems that public servants are an easy target for Rush Limbaugh and for trolls, but George Washington, Benjamin Franklin, and Thomas Jefferson were public servants. You get what you pay for, and I personally want public servants who don't have to look for bribes to do a good job.
Being an immigrant from third world - I can tell you that you have hit the nail right on the head - That is what makes America the greatest place in the world - the fact that there is no mind-numbing corruption in the daily life - the corruption is only at the high levels.
You make all these public servants poor to that extent and that blight of corruption is going to enter daily life too.
CALPERS, Rating Agency all of them are culpable..but the real criminals are the ones who facilitates this corruption - Wall Street who entices all these folks to forget their fiduciary duties.
What?
Rating agencies, DC, and Wall Street are very well connected together.
Do you feel sorry for them? Why?
If the 'credit crunch' was Enron, the rating agencies would be Arthur Andersen. I hope they burn, and hopefully some of the money they helped steal can be clawed back.